If someone else stumbles accross this thread and wants to use agend forwarding instead of identiy file authentificaion, just replace
IdentityFile ~/Downloads/Docker1KeyPair.pem
with:
ForwardAgent yes
Though, if your agent forwarder notifies when queried, you will not like the effect that EVERY bloody docker command will trigger the notfication.
Another catch: if no connection to the ssh daemon had been established before, docker context will throw a “stderr=Host key verification failed.” error when sending commands to the remote docker deamon. After a login was made (simply: ssh hostname) and added to the list of known hosts, it works like a charm. Even though adding StrictHostKeyChecking no would skip the host validation, it is not recommended to do so.