I thought it would be interesting to see the various responses. Ancestral eating varies from person to person, and can be confusing to a newb.
My definition of Paleo is--
If the food on your plate can be found in nature just as it is (NOT chemically altered, NOT processed into something unrecognizable) then it's Paleo.
I think excluding healthy foods from the American continents on an "evolutionary model" is just plain stupid unless one has an allergy. Potatoes, peppers, squash, nuts, etc are all good in my book. I don't think beans are meant to be eaten either, considering what a pain it is to render them edible. Basing one's diet on whether a food can be eaten raw is also pointless, as man has been using fire to cook with for so long to think that fire and cooking hasn't played a major role in our diets is absurd.
EDIT: I can see the point raised by Wozza, that if "Paleo" is going to be so broad as to include non-foods like whey protein powders, supplements, dairy and other Neo foods, that all of that sort of waters down the very definition of the Paleo. One would simply be on a whole foods diet that excludes grains and legumes (which is how I'm leaning, to be honest).
The thing is, perhaps Cordain picked the wrong era. The Paleolithic covers several species of human ancestors, various climes and ranges in food. That allows for a LOT of interpretation. Hence, confusion.
I look to traditional ancestral diets to guide my own, but I don't have a single pithy statement to define what I eat. I look at the history and relative merits of each type of food, and I consider how my body responds to it. Then I use that information to make my decisions about what I do or do not include in my diet.
I say I eat "low sugar, low diary, low carbohydrate, high nutritional foods. Lots of meat, eggs, fish, seafood and vegetables but avoid grains and legumes."
Personally I drop the word "Paleo" and simply mention that managing blood sugar is critical for health and that I focus on foods which are most useful for the body. That there is mounting evidence for the stress grains and legumes have on the body, and mention that we really do not digest certain plants well which is a mixture of our and their evolution. I give blueberries versus grains as a rough example: one likes to be eaten the other doesn't and fights back. When people ask about where my "energy" comes from with lower carbohydrate, I explain vegetables do also contain carbohydrate, but that the body can use animal and plant fats as it's energy source which are far more nutritious than bread, pasta, chips or potatoes. Simply I say I eat more meat and vegetables rather than just starchy fillers. When they ask about fat and cholesterol I ask them if they want to read some articles or borrow some books as this is harder small-talk.
I find as soon as I use the labels "diet", "paleo", "primal" or even "evolution" people turn off, so I drop them altogether. I let the links, articles and books I pass on bring them up.
I think of it as ancestral eating now and my definition is broader than you described. I include fermented things like sauerkraut, yogurt, water kefir and dairy such as cream, half and half, butter, etc.
I'm even including occasional batches of mixed beans that are soaked thoroughly.
Even in the holiday season, I'm avoiding baked goods--not because they're processed, but because they can trigger my binge eating--and sticking pretty much to whole foods. My big treat for Thanksgiving is a goose and a tiny piece of paleo pumpkin pie. My Christmas splurge will be carbonated cranberry apple juice (using my water kefir grains) and beef steaks (I usually stick to cheap meat and marrow bones.)
So, milk would be fine, but cheese and ghee are out? (unprocessed vs. processed)
And really, it's only "Paleo" if Cordain has ordained it to be so. /sarc
I don't define Paleo, because I don't care to do so. The only thing that matters is figuring out what works for me. Paleo is only one of many concepts that I am willing to utilize to better my health.
Paleo is an attempt to emulate the diet and lifestyles fitting to a time period when humans were at what we might think to be a peak of physical function with even larger brains than today. By emulating their lifestyle we try to flip the genetic switches that promote good health.