I've stayed twice in Pfronten, the last time here. Gasthof Aggenstein is family run and right on the road between Garmisch-Partenkirchen and Kempten, a little west of Reutte (and a lot nicer town).
Incidently, I discovered Pfronten on a bus trip from Fischen im Allgäu (another back door) to Füssen. Had I been in a car, the main road bypasses Pfronten, and I never would have found it. I didn't have time to stop that day, as we were planning a full day at the castles, but I noted the name and looked it up on the Internet when I got home. I've come back twice for three nights. It's a much nicer town than Reutte to use as a base for a visit to the castles, and you can find some reasonably priced accommodations there. We had a nice double room at Aggenstein, with breakfast and our own bathroom, for less than 60€. When you stay there you get a bus pass for free transportation in town and to Hohenschwangau.
Looks like Pfronten has a one-day Christmas market on Sunday, December 15.