Bonnie:I have been finger picking and flat picking for 35 years, and being a play-by-ear musician, I started like you did. I learned different patterns and the chords to all the standard open chord keys. I played with records till the grooves wore out. And I tried to learn as much as I could from other players. In the process, I learned a bunch of tunes where "the melody is picked out". (Freight Train, Fennario, Today While the Blossoms..., Blowin in the Wind, etc.) Now that I have played so for so long, it is sort of an unconcious process of layering a lot of licks, patterns, and stuff you learned from other songs together in order to play some new tune. You don't really think about it, but you have learned your way around the chords, scales, and patterns that you can do it. Yes, it is a process of time. And for me I loved every minute of it, and I never thought of playing as practice. Some people I have taught at workshops over the years ask me "How long will it take me to get to play like you?" and I reply "Maybe 3 or 4 years or maybe 35 years, who knows!" The key is just to play cause you love it, and keep learning new stuff, and meet people, and the time is the fun part. People who think that they need to learn to play well quickly are doomed. Quickly is a relative thing. You have to love the learning and not pay much attention to the fact that you cant play like a pro when you ARENT ONE YET. Everybody stinks in comparison to someone else who is better. So what.
Now, if you are trained classically, and sight read, it is kind of like typing, because you don't learn patterns -you just play what is written. But as a folkie, you have to find your way around. I am still doing that - finding my way around. But let me assure you, you will keep learning and improving forever. You just have to keep playing.
In formal training, you are given a lot of scales and excercises in order to train technique and familarity with the fingerboard. Once you have your hands trained, like a typist, you just go where the music tells you to. But in our style of picking, the scales and the map of the fingerboard is learned in an internalized,visual way. We figure out where the obvious notes are in a scale (key), because they are the easy ones that are in the chord structure, or are easily added by lifting a finger, doing a run, adding a note with a free finger, etc. This was how I learned to pick out the melody while keeping that "good old right hand Travis Style Pattern" going. Now the trick is that the right hand has to figure out how to "break" the pattern and alter it in order to have a finger hitting the note that the left hand is hunting out for the melody. Whew, what a mouth full. I hope you can visualize all this.
It sounds like you have learned enough of the basics to keep evolving, and although this may sound like a vague, time consuming method, I really think this is how most pickers learn. The alternative is to take formal sight reading training and for this you must be really committed. (My opinion) Also, sight reading doesn't really help that much in the folk, country, acoustic world anyway. Most of what you probably like isn't written out.
There is also TAB, as I am sure you know about by now. I have mixed feelings about TAB. But you need to use it to some degree. It is a good way, at least in the stage you are in, to add a lot of material in a shorter time. The down side is that I have been to Bluegrass Jams where every flatpicker there plays Blackberry Blossom just like the other guy who learned it from the same TAB Chart. Tab can be harder than playing by ear, because for me, it means my brain kind of has to memorize it all. I am blessed with "photographic" ears, so learning from a record is not that hard, even if I don't learn it note for note like the record. I like to do my own version anyway in most cases. Eventually a memorized TAB version becomes natural, and that is the goal after all. Then you can modify it to be "your own".
Once again, the goal is to learn as many millions of nerve, muscle, brain, ear connections as possible. Believe me, one day you just realize you can play stuff off the top of your head because you accumulate so many different "pieces" of all the possible songs that it becomes automatic.
One last thing: try to find at least one other person near your level or ahead of you to pick with. You will be amazed how much this will improve your ability to play in a more rounded way. Showing someone else how to play something you know is an incredible catalyst to your own learning process. A lot of "closet pickers" have one major flaw and that is they can't play WITH others. If you are focussed on being a solo performer, I guess that's ok. But the person who plays by him/herself never gets fluid or steady rythym, and often never really completely works out tunes in a well structured way. For most, playing with others is a lot more fun and you learn faster and more.
Hope my ramble is encouraging and not overwhelming. I am sure you are on the right track. Good luck from a pickin fool in Dallas,
Richard