Tom Russell's version of Lily, Rosemary & the Jack of Hearts, done as a trio with Joe Ely and Eliza Gilkyson is my favorite Dylan cover of the last few years. Another is Bill Camplin's version of Desolation Row.

Going back a few years, there's Dave Van Ronk's version of Song To Woody and Ramblin' Jack Eliott's version of Don't Think Twice, It's All Right.