The Laguna is, true to its reputation, absolutely gorgeous. There are also stunning views of the surrounding valley as you wind along the ridge of the rim, and the occasional cow pasture interrupts the trail (complete with cows).
Like many of the trails in Ecuador, this one isn't always crystal-clear, though 90% of it is well-worn. You only have to be careful on the second half of the hike when you come to the lush grazing areas, as cow paths may lead you off in any direction. There *usually* was a sign with an arrow marked "Siga" ("Follow") pointing you in the right direction, but once or twice we had to guess.
Also typical of Ecuador, during the 5 hours we were on the trail, the weather shifted from brilliant sun to rain showers and back again - come prepared. Also, the winds are a bit strong as you make your way along the ridge.
The views were amazing but don't change much in the course of the hike - most of the time you're just skirting the same body of water. Therefore, you wouldn't miss much by making a much shorter hike, though not the workout =), and this isn't a bad initial acclimation to the altitude.
To arrive, we took the bus from Quito to Otavalo ($2.50, 2 hrs), then a short hop to Cotocachi ($0.25), then a taxi to the Laguna ($4, plus $1 per pers park fee). To return, we had no problem hailing a ride at the park entrance. The family not only took us to the nearest town but all the way to their bakery in Ibarra, where we were treated to company, croissants, and colas before we caught the bus back to Quito (2hrs, $2.50).
All in all, a very satisfying day trip.