Say what you will about Puerto Montt (locals certainly don't hold back, with Muerto Montt, meaning 'Dead Montt,' topping the list), but if you choose to visit southern Chile's ominous volcanoes, its celestial glacial lakes and its mountainous national parks, you will most likely be visiting the capital of the Lakes District and the region's commercial and transportation hub.
With its leafy, palm-filled plaza, its pleasant Mercado Municipal and its intrinsic link to Mapuche culture, Temuco is the most palatable of Sur Chico's blue-collar cities to visit. The city is the former home of Pablo Neruda, one of most influential poets of the 20th century, who once called it the Wild West.
Unlike Pucón, its wild neighbor across windswept Lago Villarrica, Villarrica is a real living and breathing Chilean town. While not as charming, it's more down-to-earth than Pucón, lacks the bedlam associated with package-tour caravans, and has more reasonable prices and a faded-resort glory that attracts travelers of a certain lax disposition.
The hot-springs resort of Aguas Calientes is overrun with Chilean families and gets crowded in the summer months. On offer are typical spa services, individual tubs, a very hot indoor pool and a large shallow cement pool by the side of the river. However, you can access the free Pocitos Termas, 80m across the Colgante bridge from the Conaf parking lot.
Curacautín is the northern gateway to Parque Nacional Conguillío. There are more services here than in Melipeuco and a pleasant step-up in traveler accommodations has leveled the playing field a bit, though you'll still be happier if you base yourself along the road to Lonquimay, a more central location for the area's three parks.