Already mentioned but Hendrix's version of "All Along the Watch Tower"
There are quite a few other good intrepretations of Dylan Songs.
Sandy Denny's cover of Richard Thompsons "For the Shame of Doing Wrong" and Elton's "Candle in the Wind" on her "Rendezvous" album.
I always liked Nazereth's version of "This Flight Tonight", so different from Joni Mitchells version, not better just very different.
Richard Thompson's album 1000 Years of popular music is a very entertaining set of covers.
https://www.youtube.com/watch?v=V4WGsMplGxU