Watch the Disco online guitar lesson by Angus Clark from Essentials: Rock Rhythm Unplugged
Main thing to notice in this performance is how the whole song is now distilled into easily recognizable cowboy chords thanks to our putting the capo on the third fret. It makes everything so much easier. I don't know how many other electric players have the same kind of bias against using a capo that I had. It seemed like a tool for the unskilled, and it makes it impossible to bend when you're soloing.
I've outgrown that bias as I realized the sound of the acoustic guitar is married to these voicings and the mix of fretted and "open" strings that they involve. As soon as you find the right capo position, you unlock the ability to make the part truly a guitar part - rather than a keyboard part being played on a guitar.