Finding the balance

Yes! This always seems to be one of the hardest areas of guitar growth. You summed it up really well, too. How do you use technique musically? There are TONS of approaches for this problem and I’m sure each one works for someone out there. The two ones that I like to keep in mind that help me feel more musical are:
1. Hum what you are playing. I say hum instead of “sing” because the pitch isn’t really important. It’s the cadence and rhythm that are. If you hum something like “Jingle Bells”, you’ll notice that the pace is actually pretty fast (or you can at least hum it pretty fast). But the melody and rhythmic cadence is still really strong. Let the music come from you, not just the scales you’re practicing and it’ll always be solid!
2. Steal from the best. If you’re feeling that your legato and economy picking is strong, try hunting down riffs using these techniques from other players that you think sound cool. Guthrie Govan, Greg Howe, Frank Gambale, Synyster Gates, etc. are great examples to check out
Figure out how they are using those tools and try learning a couple of their licks. It’s much easier to create improvised lines if you have a bag of tricks to pull from.
Hope that helps, but I think the main thing is to just keep playing… If you’re a musician, you’re always going to be trying to improve aspects of your playing. I know I definitely have a lot to work on! But that’s the cool thing about it too- you get to play guitar AND get better at PLAYING GUITAR! pretty sweet deal.

You could try to join economy and legato into 1.
First things first find the melody.then work around it. Add to it.maybe stretch it out. Lots of options there.

I’m starting to look at speed more and more as a way of adding Dynamics in my playing. So try to find a melody(in whatever way you can) and then shred around it. That can make for a good balance between shredding and melody. Another thing to realize is that people like Bach, Vivaldi, Chopin and Paganini are probably the most musical shredders I know so you could also try to look at what they do.

Instead of a solo man.. just play the song.. get to that part. And just do it. Even if it is just a 2 note melody.. you can expand that easily by making the 2 notes 2 licks that juist end on the 2 notes. So I imagine you could do that with legato. Lots of hammer ones end on 10 donit again end on 12.
But point is focus on the melody while playing before you think of the solo. Somewhere in that song is a melody too.. if you find that melody I bet itll fit in the solo part. It’s usually the chorus. That makes it easier and more cliche but it works too. Good way to start.