Can anyone recommend a mid-range $ bed & breakfast near the castles?
"Haus Weiher"
It is in a great location only a few minutes from Fussen and just below the Neuschwanstein castle. From the balcony you will have a priceless view.
The Hohenschwangau website, www.hohenschwangau.de/hotels0.0.html, has a listing of hotel right around the base of the castles.
We stayed at Haus Peters last year and had a fine time... we got the info from Fuessen's TI office after we arrived. It's in town about 3 or 4 blocks from the train station.