This questions comes up a couple of times a year on the ABB list. Here's a summary from the most recent run through:
One of the long-time road crew members of ABB has said that he was told (by Dickey) that their version did come from Alligator. This is perhaps the standard version of the story. There is an enhanced version that has the ABB band members at the GD Piedmont Park show where Alligator was played (I don't recall if setlists are shown for that performance). Although Duane and Gregg were listening to the early Dead albums and so might have picked this up from their, they did not incorporate any other dead material so the link might be incomplete... and if you listen to the recordings of the Allman Joys you will hear them doing covers of Yardbirds and others--including Old Man River from Jeff Beck's Truth album--along with Morning Dew also from the Truth album (not similar to the Dead cover). The Second Coming (the Betts-Trucks band) Likewise did covers of other groups (including Airplane) but not of the Dead. I've always placed the Allman Brothers/Hour Glass in Los Angeles (Gregg was apartment mate of Jackson Browne) and the connection to SF bands seems less clear. In 1998 ABB invited a group of fans to travel along for eight shows (we had our own bus) and I have on tape a discussion with Jaimoe from about 3 AM on one of the travel nights on the bus. HIs description of Mountain Jam is as follows: They were sitting around (apparently with acoustic guitars) and Dunae played the melody riff from Mountain Jam. Dickey began playing, and then played the melody of Hot Cross Buns -- with is the opposite or reverse notes of the Donovan melody. Jam on the two of these melodies and you have Mountain Jam. Jaimoe was, I believe, somewhat dismissive of the idea that this came from Alligator, and having grown up in the south, I can second the idea that Donovan's Mountain was ubiquitous on the airwaves during the year that the album was released. And the Sunshine Superman album was something of an anthem as well (yellow sunshine...) especially after fly Jefferson Airplane in Fat Angel. I grew up in Nashville and while several years younger than the ABB members (we saw them a bunch of times in 70-71 while freshmen-sophomores in college) I was interested to find out that they were listening to many of the things that we had been listening to--teenagers playing in bands and hoping to get out of the south--and that was yardbirds (and beck, and clapton, and then page) and ten years after. I always made the connection to Donovan; because few of my firends--including everyone who played in bands--listened to the Dead (they were rarely touring in the south in 69-71) I never did make the connection to Alligator as origins for Mountain Jam. RH