We explore dipole-dipole interactions between cold 87Rb Rydberg atoms, their utility for quantum computing, and their potential role in the development of exotic quantum phases in optical lattice systems. Rydberg atoms can have large dipole-dipole interactions, due to the fact that they are easily polarized. We propose a new atomic state, created by admixing the Rydberg state with the ground state, in order to create an atom with a long lifetime and an intermediate dipole moment, which would be useful for experiments in optical lattices. These states could be used to probe phases of the extended Bose-Hubbard Hamiltonian, as well as create novel R-dependent interactions that are not realizable in conventional condensed matter systems. In addition to the dressed-Rydberg states, we consider the use of external DC electric fields to produce a variable interaction strength. A Stark map of the specific Rydberg levels shows the energy shift of a Rydberg atom in an electric field, as well as the dipole moment, from the slope of the curve. We study Rydberg excitation in an intermediate density regime under the effects of a variable external static electric field. We use superatom analysis and Monte Carlo simulations of a Rydberg system with dipole blockade to determine that our experimental observations are consistent with an increasing dipole-dipole interaction due to an induced dipole moment, with an enhancement due to black-body-induced transitions to nearby higher-angular-momentum states. We also investigate the Van der Waals interaction by considering the zero-field excitation rate for multiple principle quantum numbers.