Mícheál Ó Siadhail points out on I think page 145 of Learning Irish (remembering page number from memory of reading last night) that the genitive is optional for younger speakers in Cois Fhairrge apart from a few instances.

Most of this stuff is rendered extremely complex in the grammars - what to do if the noun is qualified and what to do if it is qualified and indefinite or definite etc - it may not be a good way of teaching it. You can end up with a list of rules that are impossible to remember, and often relating to things you don't often see. You can read Irish for years without seeing an example of a verbal noun followed by a noun followed by an adjective. This may be because there are other ways of saying things (bhí leabhar maith á léamh aige, instead of bhí sé ag léamh leabhar maith), and so the problem existly mainly in grammar books (depending on dialect, probably).

I think the thing to do is to learn the genitive, use it after prepositions like timpeall, chun, i dtaobh and le linn that take the genitive, use it after the verbal noun when there is a simple noun being governed - and beyond that do what comes easiest, and when you do your reading and see it being used or not being used you can figure out in context why it is or is not being used.

Grammar books have to lay down an exact rule for everything. E.g. if you read an English grammar, it might try to tell you to say "none of us is" instead of "none of us are", but in actually both are heard, and the real language is not fully covered properly in texbooks - and Irish is like that, but even more like that....

To add to what patrick is saying, I think trying to use the nominal grammar too accurately can lead you to say somewhat
unnatural sentences.

I think many native speakers in Kerry/Cork (I don't know enough to comment on the others) would view:
Bhí leabhar maith á léamh aige.
as a better sentence than
Bhí sé ag léamh leabhair mhaith/leabhar maith. (I think in Munster literature, leabhair mhaith would be more common )

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The dialect I use is Cork Irish.
Ar sgáth a chéile a mhairid na daoine, lag agus láidir, uasal is íseal