LOVE this song. Sounds to me like Jerry has the melody of the song in his head (which he usually did), starting each phrase with the melody or something close to it, but straying away from it toward the end of the phrases. So IMO the first thing to do is get the melody down, then find small ways to embellish it. Or, another way to look at it is to take the rhythmic phrasing of the melody, but change the notes (if that makes any sense). The way the chord progression moves, it seems to me that you can't really just noodle around within a scale if you want the solo to sound "right."
I suppose you could say that's the key to a lot of Jerry's solos...start with the melody. Sounds obvious when you say it out loud.
http://www.highcountryguitar.com recently re-vamped and updated.
Ideal practice tools for improvisation...backing tracks, lessons on modes, CAGED, etc.