Base village for 3 days on the Ring of Kerry?

Purely subjective opinion here, but after staying in Killarney on our first visit we've since opted to stay elsewhere around the ring on subsequent trips - our favorite being on Valencia Island near the village of Portmagee, from where you can catch the boats out to the Skelligs. We preferred to be away from the crowds in Killarney after doing it once. That said, if it's your first visit then being in the center of things might be to your liking. Lots to do in and around Killarney during the day and in the evenings. Just be ready to share the experience with plenty of other people. Unless you get an early start to your day traffic can be an issue getting out and about as well. As I recall the tour buses start to roll between 9 and 10 AM - highly recommend getting out of town before that...the earlier the better.
We think that one of the prettiest walks in Ireland is the Gap of Dunloe. Can't recommend a day out there highly enough. The walk is gorgeous (7 miles round trip to the head of the glen and back) with too many photo ops to count. The jaunting cars are a fun thing to do too...great experience chatting up your driver, who usually has stories enough to fill an entire day.

Don't have the problem with crowds and congestion if you stay elsewhere around the ring, which is why we prefer Valencia Island. The Skellig Ring road is an unappreciated little gem of a scenic drive with picture-postcard views of the islands on a sunny day. Some nice hikes in the area too. As of our last visit (summer '14) the tour buses didn't go out that way which makes for a much more mellow experience than staying in Killarney. Others have recommended Kenmare as a good alternative. It's close by the Beara Peninsula which we highly recommend - also has some great scenic hikes, and you can drive out to the end of Beara and take the little cable car (posted capacity is 3 people and a cow) over to Dursey Island for more great hiking among the ruins of a community that was extremely hard hit by the famine years and now is now virtually deserted except for some grazing cattle and sheep.
Safe travels.

We stayed in Kenmare for four nights. It has access to RoK in both directions so we spent two days driving the Ring of Kerry, first a loop towards Molls Gap, Muckross House, etc. then the loop towards the peninsula. We did not visit Skellig. We also spent one day on the Beara Peninsula which might be more beautiful than RofK. We stayed in Ardmore House, a quiet B&B about five minutes walk to town. Kenmare has many restaurants with music, its own stone ring, and a few other sights.

We spent 4 nights in a wonderful AirB&B cottage in Cahersiveen and loved it! The location made a great base for day trips--hiking on Valentia Island (and visiting Skellig Michael if the Star Wars crew isn't filming--we were not so lucky), as well as driving the Skellig Ring (be sure to stop at the Cliffs of Kerry--fantastic views!). There are also local castle ruins, ring forts and beaches to explore, so there is plenty to see and do.