Yes, you can get the local currency out of the ATM.
Reykjavik is the smallest of the Scandinavian capitals (the whole country has only 320,000 people), and yes, a city tour of about 1/2 day is enough to see all the sights. Otherwise, it feels kind of like a resort town.
The attraction is in the scenery and natural phenomena (volcanoes, hot springs, glaciers) outside of the city.