In many cases not even one of these assumptions is correct. In developed countries and major cities, yes, but in much of the developing world they're still waiting for the phone guy to show up. Sometimes it's best to trust serendipity: just show up and have a look around.
Otherwise, where do you find out about the gems? Here are a few ways to open up the options:
1) Crack open a guidebook.
Yes, good ole ink on paper still trumps the Internet when it comes to finding small hotels with character. Guidebook writers get plenty of feedback when they screw up too, so it's a self-correcting process.
2) Consult local web sites.
Nearly any town or locale with lots of tourists will have some kind of local web site, often run by expats. These usually have far more area lodging choices. Examples include Travelfish.org (Thailand and its neighbors), Andean Travel Web (Peru), Yucatan Today, and BrazilMax.
3) Check review sites and message boards.
Review sites such as TripAdvisor, VirtualTourist, and IgoUgo can be helpful, but keep in mind that the smaller hotels aren't likely to have as much feedback as the big ones. Travel message boards (Lonely Planet, Fodor's, etc.) are a good place to turn to if you're hitting a dead end.
4) See sites that specialize in smaller hotels.
Like the EuroCHEAPO site we profiled recently, there are a few web sites that aren't focused on big chain hotels. We especially like Unusual Hotels of the World and Historic Hotels of Europe.
The photo here is of Rumi Punku in Cusco, Peru--goes for $40-$55 double per night, including breakfast.
Related Stories:
· EuroCHEAPO Digs Up Bargain Hotels in European Cities [HotelChatter]
[Ed. Note: Our own hotel maven 
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