I exchange some casual Pedal Steel lessons for Guitar lessons with a local Jazz aficionado who was a former Deadhead.
Christopher Woitach - http://www.affmusic.com/bio.htm
Anyway... He was showing me that the "2 above, 1 below" thing that is being discussed here is a typical Jazz lick/method of turning an arpeggio into a single note solo.
It varies a little if the chord is major or minor, but there are tons of uses, and King Solomon’s Marbles is probably the most blatant example of taking a known Jazz lick right out of the playbook.
This lick can also be heard on alot a Sugar Mags and Miss Halfsteps, among others (works great out of A or Am barre chords at 5th fret). China Cats and Cumberlands also come to mind.
You can slip it in anywhere you are working an arpeggio into your solo... Touch Of Grey also comes to mind.
Another related Jazz/Be-bop lick-trick (that Jerry does not do that much) is you play a short be-bop lick, then repeat the lick one fret up, then play it again in the original position. You hear that alot on Jazz/Be-bop solos, too.