Cant tell you much about Algarinejo itself as we have never made it there, having stopped off at Montefrío (although looking at the place it seems quite nice).
All I can say is that it is a bit of a way out and the road there is a bit of a "scenic route", so staying there long term you may feel a little cut off if you want to visit surrounding towns in the province on a regular basis.
But for holidays, yes, it looks good.
It will definitely be "indigenous"Thanks for that, Solwriter. It looks quite "indigenous" - the real Spain - which is what I would want. Also being a bit hogher up in the hills might make it a bit cooler, which would suit my wife.