"Lijiang itself is a bit of a sh*thole,"

No it is not, folks. People who say completely unjustified things like this are trolling, projecting, uninformed, or maybe just trying to scare others away from what is actually a beautiful place. Even old town is nice, if you go there when it is quiet.

Thank you guys for your input. Appreciate it.

What would you say about the internet in both - reliability, speed...?

That question has a lot to do with your neighborhood infrastructure. I live in Kunming, but where we live, internet and mobile phones can be bad at times.
I should imagine that some parts of Shangrila are OK, but other parts will not be. Lijiang is a city with more commerce, and commercial customers usually get more from their telecoms providers than private customers, generally.

In my Lijang apartment torerents topped at at 1mb/s down and about 200kb/s up. The account was capped at that speed but only cost 70 kuai a month, so I cannot complain.
Here in Kunming I have had u to 5.6mb down from a few well seeded private trackers, but nobody really needs that kind of speed on a regular basis.