We stayed at the room in the lower level with private bathroom and terrace. The photos don't lie – the views are absolutely to die for, and there is a hammock too! Just for this the room is totally worth it.
Another plus is the shower – you can see the terrace, and the views, through a small window-like opening while you shower!
The bed was firm and very comfortable and big enough for two of us to sleep great.
Also, you've read it before, it is at the entrance of a favela. And we came and went, day and night, and never felt unsafe nor was anyone anything but friendly. So worry not at all!
Now, Santa Teresa is not too connected to the rest of the city. There are a couple of bus lines that'll drop you there, but it still feels just a just a bit far from the rest of the city. But then again you can't have both the views and be near it all, right? Also, the WiFi signal varied in strength a couple of times (literally) so if you absolutely need to be connected 24/7 full-speed... well, then again, why would you come to Rio and to this place with these views if you couldn't drop everything and just enjoy a cup of coffee and simply gaze at the sea and vegetation and Pão de Açúcar?
I loved it.