I get asked sometimes for recommendations, and here are my thoughts. The scope of our trip was pretty small due to the short length and season, so there are going to be other far more comprehensive resources for you. =)
Hotel Ranga was a fantastic place to stay. Nice accommodations, surrounded by open space and a creek, several hot tubs, etc., but the two most unique parts are the astronomy center and the fancy restaurant. According to this article by the BBC, they built the astronomy center so that guests who missed out on the northern lights could still get a sky show. While we were there astronomers were guiding the telescopes and showing us the planets and milky way, while also cursing the brightness of the northern lights because you couldn't see the stars as well. If you don't have time to spend the night there (or if they are full) you may want to still go there for dinner. You'll need a reservation, but the food is very high end and fabulous, so it's worth it. And you can likely go to the astronomy center while you are there (presuming it's dark).
Hotel Ranga was where we launched our south island adventures, which we took with a fabulous company called Midgard Adventure. We took two trips with them, both private (one on purpose and one by accident as no one else had signed up for the group trip). Our favorite by far was the hike up to Thorsmork starting by the Volcano Huts. The view as we ascended was amazing, there were few people, and this was a location we could not have gotten to on our own as some impressive driving through rivers occurred to get us in an out of the location. We got to see arctic foxes, and ate packed lunches midway through the descent of the peak. The other day we drove down to see the black beach, waterfalls, stopped at a cute restaurant for food, and such. The guide was interesting and knowledgeable and told us great stories, but it somewhat felt like we could have made the drive ourselves. The hike up toward the highlands was much more special.
A word about northern lights tours. We selected the SUV as opposed to the bus tour thinking it would be fewer people and more secluded, which was wrong. The SUV we were in with 6-8 people joined a caravan of 20 other SUVs so we were watching the northern lights with more than a hundred other people. This meant a long, cold wait in line for them to take your picture with their tripod/camera set up lights in the background. Not terrible, but also not what I had imagined.
In Reykjavik we enjoyed stopping a the Mikeller brewery bar - a tiny bar on the third floor. The restaurant on the floor below it was very good - AND - was playing the Cure and some great old mellow alternative 90's music that set a great mood and made me happy.
A word about Golden Circle tours. We were on a small bus tour (maybe 25 people) that was intended to hit 5 or 6 spots, and we LOST 3 tourists at the first stop which cost us an hour of waiting/looking for them and meant we had fewer stops and less time along the way. I had selected a version of the tour that had us stopping at an Icelandic farm, which was nice to see some cows, eat ice cream, etc. but the tours that involved sitting in hot springs or other things may have been a better choice. I don't know if doing an SUV tour with fewer people would be safer (lower odds of losing tourists if you have fewer people?) but maybe all you can do is listen to the instructions of the tour guides closely, and help others from your bus who you see maybe going the wrong way? As we were there in winter we did not consider driving the circle ourselves - weather was too uncertain. That big snow storm a few days before we got there resulted in all tours being cancelled for a few days, so it seems like we made the right call.
Anyways, we loved our trip and hope you do too! Our photos were good, but this guy we met at the Volcano Huts has even better pics. https://www.instagram.com/r3dmax/
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