Yes, it's exhilarating making music with others. I'm glad to hear you can make music with others, there's no greater feeling than that, in my opinion.
I don't have any answers to the original question, which is the best teaching method. Depends on the student, depends on the teacher, depends on what you want, depends on age, depends on ability, depends on physical limitations.
As for confidence, its sounds like you gained some confidence making music with others. All performers have some level of anxiety before and during a performance. But in many cases, the audience is forgiving and just appreciates the music. I guess if the audience paid a lot for a performance they might have high expectations, but if the price of admission is the price of a beer in a pub, the audience will love almost whatever you do.