Sounds like your practicing time is good. Most open mics only let you do 3 songs anyway so you don't have to worry about doing 3 hours. Most gigs are only 35-45 minute sets unless the club has you do the whole nite. the band I'm in right now, we play 3 sets with the breaks like you said but over the last 20 years it's usually been a 40 min set or so. Almost every band does at least one cover at some time in their performing so you're on the right track with that too.
I would keep doing what you're doing and pick your 3 best sounding songs and start with an open mic. You can even start with just 1 song, some open mics are like that too. You'll really learn alot by performing, it's a whole new trip! Singing (to me) is the hardest part, you should devote daily time to improvement. I sing along to an instructional course on my iPod on the way to work, going over scales and breathing excercises, it really helps!