Yeah, been to Dali many times, good place. Spend some time in the nearby Cangshan mountains if you can, a famous temple there is called Zonghe which is near some guesthouses. Otherwise you can rent bicycles or ride houses around the area. A few years ago I rented motorcycles with friends and we spent an entire day riding all around the lake through minority villages which was incredible, but I heard that a foreigner did this and crashed a bike a few years ago and now it’s more difficult to do this. Hot springs are fun also (the place is called 下关温泉).
Oh, and check out Bad Monkey. The most famous bar in Dali, run by two Englishmen named Scott and Carl. If you see a 35 year old with enormous dreadlocks inside it’s probably Scott, say hello for me. They brew their own beer called Bad Monkey which you can get there, too.
Are flights up there cheap during this time of year? That sounds like a fun trip.