How good can I get just by playing? On blitz 3|2 I am rated around 1000. I love playing the game and usually I play with players around my level. I try to play against slightly better players. Assuming I am not reading chess books or otherwise get a training besides playing the game, how good should I expect to get?
And an interesting question you pose as to how good you could become playing 3|2.
The 3 min plus 2 second increment you play means roughly say a move rate overall of about say 6 seconds per move for an average game of 50 moves.
You try to always play slightly stronger players, excellent idea, so assuming you are not getting trounced ie at least breaking even I think you will progress perhaps to 1200 to 1300.
Games will be won or lost mostly by one or two move combinations  or simple oversights by you or your opponent.
Not an issue if you are playing mainly for the enjoyment of chess.
But if your real focus is to become a strong player this is a different matter.
To put your question into perspective consider other endeavours.
Would you expect a carpenter who only built small wooden boxes in five minutes to be able to build you a good house?
A computer programmer who only spent six seconds on each line of code to become an excellent programmer without further study or deeper reflection?
If your main goal is to improve you need to start playing longer games and to play through master games that are annotated.
You will notice a more rapid improvement in your games though it will require some dedicated work.
Don't go overboard on opening theory, just aim to get a playable position out of the opening.
But it is in the end-game that playing strength really shows so make some serious effort in this phase of the game and you will improve dramatically.
After studying endings you will find your middle game will start to improve as well because you now are aware of which endings to aim for and which to avoid.
Before the internet era I did not have much chance to play over-the-board so I played correspondence chess. This long style of chess forces you to carefully analyse your moves and to study openings and endgames otherwise you could be stuck with a bad position for a year or two!
When I did get to play OTB I did regularly get behind on the clock but managed to bowl over quite a few strong players including some with titles.