After much research, I've decided upon a Ryokan in the Onsen and Seaside town of Ito on the Shimoda peninsula. It is only a 45 minute diversion from the main Kyoto-Tokyo Shinkansen route.

In this town, I found a reasonably priced ryokan with onsen. The price is around $250.00 for two people, inclusive of dinner, breakfast and taxes.

Here is the enlgish website: http://www.yokikan.co.jp/english_top.html

Again, the purpose here was to find a reasonably priced Ryokan within an hour of the Kyoto/Tokyo main train route. If anyone knows of any better options, please let me know before I reserve.

Any feedback is appreciated....