Things may be a bit different over in the US but over here in Oz, I would encourage you to just get out there and race from the start. If you were a complete beginner, then I wouldn't suggest it, but you have some sort of fitness so I would recommend it. The lower grades for us are very diverse in terms of ability. There's not much bunch racing due to this, but it certainly gives you a clear indication of just how good you are and how much better you need to be. You can get a feel for who you want to go riding with to improve your own level. Say find out when the Cat 3 (I guess) guys ride and tag along with them.
For my own purpose, racing keeps me motivated to train harder. Without racing, I just couldn't keep any real level of intensity. You really need some sort of goal. Just getting better is not a real goal, a tangible milestone is what you really need, be that time or weight or any other motivation.
I read a lot on forums everywhere that riders believe they have to be incredibly good before they can even contemplate racing. They spend a year or more trying to improve their strength and endurance before even getting into racing. I say just get in and have a go. There will be other riders most likely at your level, be that due to age or illness or level of motivation or time constrained. For me, most of the people I raced against in my first year were 20+years older than me. My first race I was middle of the bunch, but worked to win the grade at the end of the season.
Just go for it and race! Really, what have you got to lose?