Hi Cnstar33,

Mendoza is great, but you will need to pay the reciprocity fee in order to enter Argentina, so that will add $120 (or more...I don't remember how much it is now) per person for a brief visit. If that's not a deterrent, then I highly recommend Mendoza. However, the beaches in Viña del Mar and Valparaiso (90 minutes to five hours from Santiago, depending upon traffic) are a good visit for a day or two, as well, but they are the most developed beaches in Chile. If you like a more rustic vibe, smaller beach towns could be your thing (Pichelemu, Algorobo, etc.).

Outside of Santiago there aren't many global-chain properties, so when you get further out of the city it can be hard to find great places to stay without a lot of research, and Chilean hotel standards aren't quite what North Americans expect. That's not to say that lodging is bad, but it tends to average out to "okay" due to lack of amenities and poorly-managed expectations. Puerto Montt isn't known for being a tourist destination or catering to tourists much, either - if you were to stay in that area I'd recommend Puerto Varas (same airport as Puerto Montt) or, as MarinFlyer mentions, Chiloé or changing to a more lake-country-centered destination.

Those are a few thoughts from a US expat in Stgo. Have fun planning!