Excellent two cents, and probably worth a full nickel!
I agree with almost all of that. From the sound of the playing, the mandolin is surely playing out of "A" shapes and not "Bb" ones. So that tape was sped-up. In fact, the vinyl recording is not at a true Bb, either (based on A=440Hz), but it's closer to that than any other key! It's a vocal anyway, and not an instrumental, so there is no key that it "ought to be" played in, as part of some tradition. Play it wherever best suits your range, I say. As for me, I'd prefer A over Bb because the latter is a bit too high.
Also, the bass player is sure-as-shooting playing a straight I-V root sequence! The vocals, on the other hand, clearly inflect the VII chord. But how you choose to harmonize this tune is really up to you! For example, some super-traditional folks insist on just using a I-V sequence to back up "Old Joe Clark," although -- once again -- the vocal part seems to be begging for the VII. As for me, I "hear" a VII chord in "Ground Hog," (and also, like you, in "Old Man at the Mill"), and so do the folks I play with. So, leave it in or take it out, at your choosing.
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