I have recently returned from a wonderful trip to southern Baja and Cabo San Lucas.
We took the long, "Rural Coastal Road" from Cabo to the East Cape. It's a 3-4 hour drive on a dirt road that follows the coast. You can take a paved road and do the trip in an hour and a half, but if you have the time, I recommend the coastal road for the obvious reasons. It's empty and gorgeous and most of it is completely undeveloped. We had no problems with a rented Geo Tracker.
Our first stop was Cabo Pulmo where we ate at Nancys, an American (mother-in-law of a local) owned restaurant. On the down side, everyone speaks English, and prices are U.S. - US$10-20 per entree. On the plus side, it's a lovely outdoor restaurant that you can only get to by driving at least a half an hour down a dirt road. The food was excellent, as were the margaritas. Fresh fish, very nicely prepared. Exactly what you would expect in a similar restaurant in a large U.S. city - but the setting is extraordinary.
Next stop was the Hotel Punta Pescadero, which one reviewer on their website described as "Hawaii's outer islands, fifty years ago." I haven't been there, but that's what it feels like. The upside is it's remoteness (13 km along a winding precarious dirt road through cliffs along the beach). The downside is that you really have to eat there because there's nothing else around. I can only describe the food as stuff for foreigners who don't like mexican food. Sub-par steak fajitas and a tuna quiche? In a fishing town, no less.
Next we stayed at the Hotel Buena Vista Beach resort on the European plan. About 5 km down the road in Los Barriles you will find the best tacos ever (on the main road through town) - Tacos de Silvia. Everything freshly made. The fish and shrimp tacos delicately battered. Steak was moist and very nicely marinated. Chicken was grilled with onions, for a lovely smoky sweetness. Your choice of corn or flour tortillas - both fresh. And the salsas and other toppings were wonderful. Tacos were 8 pesos, except for shrimp at 12. (US$1 ~ 9.5 pesos.) We ate there as often as possible.
The other places in Los Barriles are for americans and are not good and are expensive. Otra Vez - stay away. $10 for 3 poor tacos. Baja Bakery is ok for american breakfast. Tio Pablo was ok, kind of fun but not worth the $. Their taco stand was adequate, but we only went there before we went to Silvias. They make pizza too. (?)
Best of all was in Buena Vista on the main road (Route 1) - Restaurant Calafia. It's attached to a small hotel. The food was impeccable. Fresh fish with butter and garlic (Mojo al ajo) was better than anything I've ever tasted. The seafood combination plate, for about US$15, came with a scrumptious lobster tail, shrimp, scallops and the Mojo al ajo - and it stood up to the lobster in flavor and quality. Very inexpensive, high quality, family run. The breakfasts looked good too.
In Cabo, you can't beat the happy hour all day at the bars on Playa el Medano. (2 for 1 beers all day.) We had a nice lunch at Tabasco on the beach. Quesadillas made with a small smear of refried beans only. The ceviche was good too. The one restaurant we ate at in Cabo was Mi Casa, often described at the most authentic mexican in Cabo. We had appetizers only (entree prices are US$15-20+). Cactus salad, ceviche - excellent. They have a fresh tortilla counter where they prepared our sopes and tamales - also excellent.