Yes great place.
Jan/Feb a good time to go for Northern Lights. Best place to stay is prob Reykjavik. The normal tourist routes are good, golden circle, geysers. Try and get to Blue Lagoon, you can get airport transfers that allow a few hours there too. Can't recommend any walking areas or places to stay that are off the beaten track I'm afraid. It'll be bloody cold too, especially if you do plan to walk a lot. It's a great country and I'm sure you'll love it. I don't know anyone who hasn't!
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