Meh. I'm a purest. I loooove Bob Dylan covers, but nothing beats the original for me with two exceptions:
"All Along the Watchtower" - Jimi Hendrix. I mean, come on.
"To Make You Feel My Love" - Garth Brooks. It's a beautiful song, but when Dylan sings it, it sounds like a threat. I don't know - maybe that was supposed to be the point.
"If Not For You" - George Harrison
"Desolation Row" - Nina Simone
"House of the Rising Sun" - The Animals (yes, I know this isn't technically a Dylan song, but my understanding is that he created the arrangement that the Animals then covered)
"The Wicked Messenger" - The Black Keys
"One More Cup of Coffee" - The White Stripes
"I'll Be Your Baby Tonight" - Norah Jones
I've got a whole album of Joan Baez covering Bob Dylan. It's pretty awesome, too.
I'm not sure if I'd agree with his best singing album being Blood on the Tracks. The Freewheelin' Bob Dylan I thought was pretty good as far as that goes, but they're so different stylistically that it's a tough comparison. But Blood on the Tracks is usually my go-to album when I'm trying to convince somebody that Dylan has a bad wrap musically speaking.