Built in 1929, Kanaya Ryokan is fabulously traditional, although the cheapest rooms are relatively simple. The star attraction is the biggest all-wood (hinoki) bath in the nation (mixed), called the sennin-furo (1000-person bath, a vast exaggeration) and deep enough to swim in. There are no restaurants nearby, so go for the inn's meals or pack your own.
Women can cover up with a towel (BYO or rent one for ¥300). The women-only bath is nothing to sneeze at, and both sides have private outdoor baths as well. Tattoos are totally acceptable here. To get here from Rendai-ji Station, go straight across the river and main road to the T-junction and turn left; the onsen is 50m ahead on the right.