Lots of food for thought here!
"A lot of times I find I'm hearing something that I don't know how to play, which is what forces me to improve!" Amen to that! The frustrating thing is that there is so much I hear that I don't know how to play!
And Jerry, concerning lessons with Dave Van Ronk--
What you describe is what I would call a true teacher--someone who brings influential material to the student, and challenges the student to find ways to learn from it, while being a resource to assist the student's individual process of apprehending and integrating the material. What that teaching method does is assure that every student learns to trust and follow his or her own muse. It's a method that inspires confidence, creativity, and competence, regardless of the subject matter.
Ironically, all of the teachers I've known who use this method (and they are few, but excellent), however, would deny that they have a "method". They say that they "teach as they learned" and "trust the process." Several of them also refer to "magic" when describing what they do, and, interestingly, so do their students. They say things like "I don't know what happens, it's like magic!"
I'm not sure that this teaching method can be easily distilled into the 1-hour festival workshop format for a group of students with widely mixed skill levels, styles and goals. It would be a fun challenge to design a 1-hour workshop that could send everyone away with something new and usable.
Just my $0.02, fwiw...