Plan to be in Atlanta when the peach drops on New Years Eve.
http://www.peachdrop.com/ You could leave again on the Crescent on 1 or 2 January. See if there is anything you want to see in Birmingham AL or Meridian MS before heading for New Orleans.
The Amtrak station is right next to the Super Dome. The Super Bowl will be played there in early February.
Have a begniet at Cafe du Monde near Jackson Square.

My sister has done this.

The best stops in my view would be Charlottesville, VA, where you would need a car to view Monticello and the other two houses of early presidents in the area. Monticello is outstanding because Jefferson was one of the most interesting men of the 18th century, in the US and in Europe. Montpelier and Ashlawn are interesting in different ways.

Then, as tomfuller suggests, Atlanta and Birmingham. Both have importand civil rights historical sites and interesting music and restaurant scenes.

Look for restaurants on Chowhound or Yelp, not on TripAdvisor, if you want to know how locals view things. Go to the places that locals go if you want to meet "folk", though they may or may not be "country folk", since these are substantial cities.

I agree with Charlottesville IF you are interested in the Jeffersonian stuff as well as Atlanta. New Orleans AND environs are worth at least a couple days.

Define "country folk" because you may be in for a big letdown.

Memphis is on the route of "The City of New Orleans" Amtrak train. When you leave New Orleans you can take the train if you don't want to rent a car to go to Memphis. The problem is that the train leaves NOL at 1:45PM and arrives about 10PM in Memphis. The southbound CONO (from Chicago) is in Memphis about 6AM.

Thanks to all. I have noticed that the rooms book out early and are quite expensive. This combined with my reluctance to plan ahead is holding me back. I am now considering flying to Atlanta then driving to New Orleans. I think it works out cheaper and is more flexible. I miss out on Charlottesville which is a shame. Sounded great Ackislander and Dukey1. My reference to "country folk" Dukey1 is more about meeting people away from the big tourist cities. Meet people that have not been exposed to throngs of tourists.

I've said it before, I'll say it again. I have traveled many thousands of miles on passenger trains; always in coach. There are at least 3 times as many people in coach on an overnight train than sleeper passengers.
If you do fly to Atlanta, try taking the Crescent to Birmingham.
Try to avoid making a one way car rental.
When you consider how much you will be paying for a hotel room, the train even in sleeper is comparable with a four star room with a breakfast.

I've done this trip from Boston to New Orleans in coach. I loved it, but I have some suggestions.

The seats from DC on recline quite far, are not like typical rail car seats. Bring a little pillow or a jacket you can fold up under you for extra comfort.

Take ear plugs and if you have problems with light, take an eyeshade. I also bring over the counter sleeping pills. Depending on your crowd, it can be noisy, but they turn the lights down for sleeping at about 10:30-11 (at least they did when I took this trip, now 11 years ago).

Bring a big wool shawl or traveling blanket in case your car is cold.

I recommend bringing delicious things to eat because the food on the train isn't that good. You can buy beer & wine on board though. I seem to recall breakfast being decent.

Part of the problem with stopping over on parts of the route are the arrival and departure times (the middle of the night in places where taxis are not a given). Look at the schedule carefully and consider the prospect of delays.

There is nothing lovelier than waking up in empty, rural America and looking out the train window. There are many nice views on this journey.

Hi professorguitar,

Sadly, I fear you've put off booking a sleeper compartment on the train to New Orleans until too late. December 29th is a very busy travel time and the roommettes get booked awfully early in the December 18th-January 3rd time period. As roommettes become less available, they go up in price as well. I know because I've often taken southbound trains this time of year; I got my roommette to Savannah in late July for December just to be sure. Accommodations in the interesting spots in the South this time of year can be a bit of a challenge too, but you might get lucky.

There should be resaonably-priced seats in economy class. This said, I don't know about you, but I can't sleep when upright and DC to Atlanta is overnight on the Crescent train. If you really want to try trains that might be bearable by economy class, one idea is you could take the daytime Palmetto train as far south as Charleston or Savannah, drive or bus to Atlanta from one of these two, and then take the Crescent train from Atlanta to New Orleans.

Have a great trip whatever you decide! Daniel

The Crescent leave Atlanta about 8:30 AM and arrives in New Orleans 12 hours later (7:30 Central). It is almost all in daylight which is fine for a trip in coach.
Flying to Atlanta the day before makes sense. Take the public transportation downtown from the airport.

Agree that you will not be meeting "country folk" in any of these cities. For what you seem to want you need to rent a car and get out into small towns and rural areas - none of which you will be in.

All of the places you are talking about have significant numbers of tourists - especially around the holidays - even though college kids will mostly have gone home.