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Help with planning Burma itinerary

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Currently in the initial stages of planning a long trip around parts of Asia en route from the UK to Australia for a couple of weeks to visit family. We start our trip in Oct or November. Hard enough to plan being in the right place at the right time weatherwise in Asia but after reading lots of posts here and elsewhere, I realise that if we want to include Myanmar it gets VERY busy during the "high season" of Nov-Feb. To add to this, it seems that it is necessary/ advisable to book air ticket and accommodation through an agency, which normally I try to avoid, preferring to book as we go along.

As we will be travelling for an extended period I am looking to keep costs low. We aim to use public transport wherever possible, stay in "budget" accommodation (private double rooms as opposed to dorms). Not averse to roughing it, nor do we stint when the occasion warrants and will splash out once in a while.
In additition to visiting the key tourist sites, we do enjoy just chilling out and getting a off the beaten track ( using homestays etc.) we enjoy, hiking, food, markets etc.

A rough draft itinerary I, or rather someone else, came up with is;

Rangoon

Mandalay

Monywa

Bagan

Kalaw (for village hiking)

Inle Lake

A few questions

1. Is this a reasonable itinerary for 2-3 weeks?

2. Any major omissions suggestions for a better/ different route?

3. Do I really need to use an agency? If so, which ones ( preferably NOT linked to the government )?

4. Within certain constraints we could fit this in to anywhere in our trip. Any suggestions as to what time of year? Currently thinking of avoiding the "high" season on the basis of crowds, expense and shortage of accomodation etc. Maybe June - August?

5. The probability is that we will fly into the country from KL or BKK, but does anyone have any experience of entering overland from Thailand?

6. Payment for hotels etc. is it usual to pay an agency in advance for hotels, transport etc. If so, how?

7. I know that pristine US $ bills are the preferred mode of payment. Is there anyway I can get these in BKK or KL without getting ripped off with forex charges? (Don't really want to carry too much cash around Asia for several months!

Apologies for the number of questions. Any suggestions, guidance or opinions would be very much appreciated.

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