Hey Craig - Great to see you on the forum! Yeah man, I recommend putting on jam tracks and practicing your improvising. I literally just made a post on theory for improvising in a blues context in 2nd position on harmonica here.
Thank you so much for your concern about playing in the right key! So important. Have you seen my lesson on this subject here? If you ever are wondering what would be the best harmonica to jam a certain song don’t hesitate to just make a post about it here on the forum, and I’m sure you’ll get some great ideas about what to do.
Regarding playing with other local groups, the best way would be to find a way to talk to a group member, tell them you play harmonica and would love to sit in and ask them if there are any songs they play regularly that could be cool to have harmonica on. There’s a good chance they’ll be like, “oh we play roadhouse blues, or yada yada yada.” Here’s the key point. Don’t forget to ask them, “What key do you play it in?” Many times bands don’t play songs in the same key as the recording, so this is important.
Then you can go and do your homework and practice and make sure you’ve got it together. Once you feel confident on the song, if they rehearse regularly, you could ask if you could come and jam it a rehearsal. That would be ideal! Otherwise, just ask them on a set break if you can sit in when they play that song, and if they like you’re playing it’ll be something they wanna do every time you’re at one of their performances, and then you could ask, “are there any other songs you do that could be good for harmonica?”
As with everything in life, the key is to develop relationships. This can be challenging sometimes. Mutual friends are probably the easiest way to get an “in.” If that’s not an option, maybe offer to buy someone a beer? Friendship first is always a great.
Also, @Slim shared a great resource for learning songs from YouTube here.