Bavaria/Tirol - smaller town suggestions?

Will you have a car? If so, I might suggest the Hotel Moserhof in Breitenwang...just out a bit from Reutte. There's really nothing there but a great hotel with a really great restaurant. Reasonable prices, big rooms, big bathrooms, deck with views of the mountains, patio dining, big lawn, very quiet, etc. It's a good alternative if you're looking for peace and quiet and not much more. BTW, there are lots of outdoor activities...hiking, lakes, etc. in that area.

Garmisch-Partenkirchen is a little bit touristy, but is a beautiful area. Also close by is Oberammagau. Check them out and see if they hold any interest. TC

Like scenic walking? Stay in Pinswang at the Gutshof zum Schluxen, which lies on the Fürstenstraße trail to Neuschwanstein (or stay elsewhere in Pinswang.) It's a walk of about 6.5 km that takes you past the Alpsee (lake.) Tripadvisor reviews of the Gutshof Trail details (in German, use online translator?) Pinswang (Ulrichsbrücke-Füssen station) lies between Reutte and Füssen in Austria on the scenic rail line between Kempten Germany and Garmisch-Partenkirchen Germany known as the "Ausserfernbahn." This route is covered by the "Bayern Ticket", which allows you to reach any town in Bavaria or any town along the Ausserfernbahn route from any other town in Bavaria for one price. TRAIN ROUTE BAYERN TICKET

Schongau might be a possibility. We're contemplating staying there in the future for the same reasons you're looking at. It's a bit larger than some villages in the area (about 12,000) but it is centrally located with train access to Munich. Anybody else have feedback about Schongau?

Having seen both, I would choose Pfronten over Reutte. Pfronten is a collection of villages on the German/Austrian border that have grown together into one town. It is much prettier than Reutte and seems to have more accommodation possibilities. There are bus connections from either Pfronten or Reutte to Füssen and Hohenschwangau, but I think Pfronten to Hohenschwangau has a better schedule. I know that when you stay in Pfronten, you get a pass that is good for free travel on the bus to/from Füssen. Oberammergau would also be a good place. There is not a lot to see there, but it does have convenient bus connections to Garmisch-Partenkirchen, Linderhof, and Hohenschwangau.

I was in Schongau in 2007 as part of my Romantic Road trip. I was, quite frankly, disappointed. The buildings in the town are quite ordinary. It does have an impressive wall, which seems to be more of a retaining wall to hold up the town. Access to the wall is pretty limited, with most of the top being in people's back yards. It has rail access to Munich via Weilheim. It also has bus connections to Landsberg am Lech (only on weekdays) and to Garmisch-Partenkirchen, Oberammergau, Wieskirche, and Füssen (Hohenschwangau).

Do you use bahn.de to purchase a Bayern ticket ?
How far in advance can you purchase one once you know your specific train dates ?

No advantage in buying a Bayern ticket in advance. It is for any qualifying train, not a specific one.

So the day you travel you can buy a ticket ?
They don't "sell out" ?

Garmisch-Partenkirchen is very scenic, offers a wide choice of hospitable hotels and Gaststätte, and has fantastic hiking right from town (including some gorge (or Klamm) hikes), as well as lift rides up the Zugspitze and Alpspitze.

Thanks for the suggestions. I should have added that I'll be traveling with a buddy of mine (his first trip to Europe), so I am not looking for sleepy villages or romantic hideaways. Just a good small town alternative to Fussen with good transportation access for activities, authentic Bavarian character, and some good hotel & dining options.
I'll look at Garmisch and Pfronten in a little more detail. Has anyone been to Murnau?

I really like the smaller villages of Lermoos and Ehrwald. Lermoos is the smaller of the two.. some great walking and amazing views of Zugspitze Mountain. We went up the Austrian side, you can walk to the German side at the top, when we did it there was even a passport control at the top of the mountain, but it was a number of years ago before they got rid of the borders. Garmish was just too big and too American, I like to visit places that don't have a Mcdonalds! The transport links are there, we used a train to visit a few other places in the area.
Enjoy your visit, we love the Tirol spent many a holiday in the area.

"I like to visit places that don't have a Mcdonalds!" I guess you'll just have to avoid practically every city in Europe. Garmisch-Partenkirchen is probably the most accessible town via public transportation in the region. As others have noted, it's a fairly large international resort town (other than the US recreation resort on the outskirts, I don't find Garmisch any more "American" than any other comparable Alpine resort), but still for the most part, quite charming. You have the widest selection of hotels and restaurants here. I also like Erhwald and Lermoos, but I wouldn't stay in either without a car.

Carla, there is no advantage to purchasing a Bayern-Ticket from Bahn.de unless you are starting the days travel outside Germany and crossing the border. You can get one from ticket automats or for 2€ more from a manned ticket counter. The Bayern-Ticket is valid all day long (after 9 AM workdays) for hop on/off travel on regional trains (RB, RE, IRE), NOT express trains (ICE, IC, EC) throughout Bavaria and to some "border" stations like Salzburg. It is also valid for ALL conveyances (S-Bahn, U-Bahn, trams, or buses) of metro districts (Verkehrsverbünde), like Nürnberg (VGN) or Munich (MVV).