I am a big Dylan fan, his song/poetry skills are excellent. I do enjoy his singing as well, but often times a Dylan song in the hands of another can be excellent, as well as better than Bob (sorry, Bob).
You mention "Watchtower", that is at the top of everyone's list.
This one deserve to be near the top: "I want you" - Sophie B. Hawkins (From Bob fest)
Excellent, as well as sensual.
I love that there are other versions of his songs, because to me that means that those who listen to his lyrics find their own interpretation of his work, and make it personal. I think that is the quality of all great art, not only that it speaks to us, but that as time goes on, we find new meaning to his words.