Hi Carolyn,
Lucky you to have 2.5 weeks in Iceland. We had ten days to do the ring road and wished we had more. We had a package from Icelandair but ten days was the maximum amount of time for that package.
We saw puffins up close and personal last June in Borgafjordur Eystri which is in the Northeast. We stayed in Egillstadir (sp?) and drove from there to see the puffins. Most of the drive is dirt road but the beginning is paved. I think it took us about an hour to get there and it was a beautiful drive. We were lucky and had a sunny day. You may get to see the puffins but that is the tail end of the time to see them. You may get to see the northern lights but no guarantee.
I would suggest getting the gps from the rental car agency as the Icelandic alphabet is different from the English alphabet and using a gps from home could very well lead you down the wrong path. Be sure that the vehicle you rent is approved for driving on some of those interior roads. Some of those roads are a no go for a regular vehicle and if you damage the car, etc. you will be liable. We found the main roads to be good but there is basically no shoulder to the road so stopping on the side of the road to take photos is next to impossible. There are very few turnouts where you can do this. Whoever is driving really needs to give their full attention to their driving on the roads in Iceland.
There is a thermal bath in the Lake Myvatn area in the north that is less touristy than the Blue Lagoon. We enjoyed this.
In Reykjavik we really enjoyed the museum of Iceland (sorry I can't recall the exact name). The museum is not huge and gives you a wonderful overview of Icelandic life in times past. Skip the phallic museum in Reykjavik. It's really a stupid waste of time and money IMHO.
For a good read, I would suggest Burial Rites which is a fictionalized account of the last public execution in Iceland in the early 1800's. It's a very powerful book and gives a good description of life in the 1800's. One of the executed was a woman. The axe head that did the deed is in the above referenced Icelandic museum. This story has a bit of a cult following and people make trips to the place of execution on the northwest part of the country.
Try the skyr cake. It's like cheesecake. Skyr is like a more sour yogurt.
The people of Iceland are really super, so friendly and accommodating. Hopefully that doesn't change as Iceland becomes more popular.
I know you have probably seen the blog I Heart Reykjavik. It is more than just about Reykjavik and is more like the Bible for traveling in Iceland. It is chock full of great info. I highly recommend it. Audur who writes the blog also has a FB page and there are good updates on goings on in Iceland. I would also suggest looking up one of the local papers online.
Near Geysir, there is a really good restaurant in a tomato greenhouse. The restaurant is in the actual greenhouse and all the power for the greenhouse is thermal. The menu is limited and tomato based obviously but very good. I believe it is mentioned in the I Heart Reykjavik blog.
We did not do the glacier walk, etc. as it was all we could do to make that drive around the country in ten days. Not much time for anything else sadly.
Be warned that food is very expensive in Iceland.
This is as much as I can think of off the top of my head. You will love Iceland. It is absolutely beautiful. Enjoy.
