I've stayed at the Agua Azul in Mao and I agree with Kate. You don't need reservations, but let me know on the board and I'll get the phone number for you. It's a very nice hotel right in the heart of Mao. You don't want to commute from Santiago every day -- it will waste most of your time, be stressful and not very enjoyable. Mao is in a remarkably beautiful setting. Drive east of town at sunrise or sunset -- set between two tall mountain ranges and surrounded by rice paddies on all sides. There is poverty, but it's not grinding, and a very pleasant place to spend some time. Admittedly not much to do within Mao itself: They have a sports stadium, a large central park and that's about it. But life goes at a pleasantly slow pace and there are a lot of rustic touches, like men that deliver milk in pails from door-to-door via a mule-driven cart. One good place to eat is Gigante Pica Pollo, though your sponsor family may know better than I do.
Finally, Moncion is a great idea. There are a series of caves, Cuevas Doran, that you can hike to from near Moncion. They're along a river and all bear Taino petroglyphs and pictographs. Also, in the nearby town of Cacique is one of the best restaurants in the entire country. It's called Restaurante Cacique -- where you can order unbelievably good creole goat dishes with cassava bread. Wonderfully nice people all along here.
