Hammer, been there. Grew up in Appalachia, the veritable cradle of bluegrass/old-time music, where they really frown on plugged-in basses of any kind. =) I started as an upright player and switched to bass guitar later.
The good news is, there's quite a selection to choose from, and at several price points, Rob Allen, and Rick Turner being examples of the upper-middle. If you're expressly looking for an acoustic bass-guitar, then neither of those help much. Godin also made a very nice semi-acoustic, piezo bridge equipped bass guitar that actually produced audible sound, at least enough to practice with. Unfortunately, it feeds back at high volume, as will most any ABG.
Now here's the sticking point for the band. NONE of the above really sound like an upright bass. True, you can get some of that upright inflection with hollow bodies, tapewound strings, fretless fingerboards, and some clever muting techniques, but it's difficult to get that upright bass sound even out of an electric upright. If their sensibilities about acoustic bass are based on the visual, then that's a losing battle IMO. Really, the trouble with acoustic basses, even and especially uprights, is physical; they are very hard to amplify. There is always a balance to be struck between quacky piezos and boomy mics, the result is often less than ideal.
On a personal note, I have somewhat successfully integrated Turner Renaissance basses (fretted & fretless) into several folk-bluegrass ensembles, even a neo-oldtyme string band, but the traditionalist element here is intensely anti-electric. Of course, YMMV.
Good luck in your search... they are loads of fun! I too have often wondered if Alembic had any interest in building a piezo-equipped bass, maybe even a combination of magnets and piezo bridge. I'd love to hear their take on piezo electronics with low-pass filters and q-switches.
