Hi Dave. That's great!
For a cool exercise, look at the B section of Blackberry Blossom.
It goes like this in the Key of G in which it's usually played:
Em (three measures) B7 (one measure) Em (two measures) C (two beats) G (two beats) D (two beats) G (two beats) (x2)
Translated to Nashville Numbering System, it's a vi, III7, vi, IV, I, V, I progression. I like this because the Em to B7 change sounds pretty cool.
So let's break this down and navigate the changes. Since you're a guitar player, let's say the banjo or fiddle has already played the break laying out the basic melody and you want to improvise a little, getting away from the basic melody but still suggesting it in your break.
E minor is enharmonic to G. That means they have the notes, except in different orders with different intervals between them. Simply, whatever licks that you play over G will also work over Em.
I'm also fond of what are called Composite Scales which are major pentatonic scales with an added "blue" notes (the minor third - iii) and used widely in country and bluegrass.
In this song, I like to take the G scale up to the "E" position at the third fret. (I'm getting into CAGED here which I can talk about more if you like.) There are some licks based off that position which will work nice in this song. You've got three measures of Em, so they're plenty of room to develop a nice lick.
If you don't know already a B7 on the guitar is played like this:
221202. Your middle finger will cover the 6th and 5th strings for the bass line when you are playing rhythm, but the root is actually on the 5th string.
B7 contains a I, III, V, and bVII of the B scale. This is a dominant 7th chord. Mixolydian mode takes the 7th of the major scale and flats it, so B mixolydian works over a B7 chord. Any chord book will show you where B mixolydian lays out on the fretboard.
The rest is a standard progression.. but once you "dissect" this tune, there's certainly room to make it interesting while keeping it musically acceptable to the bluegrass realm. I really like what Tony Rice did with it.
Any questions?