What form of currency is best - cc or travelers cheques?

It is much easier using pesos. A lot of people use their check/debit cards to get pesos--others cash trav. checks into pesos.

We became uncomfortable using our credit card in PV several years ago--there was quite a bit of skimming credit cards. We just use pesos.

How much lower are the exchange rates on Travelers Cheques?

I deal only in cash as you might tell by the looks of my pic. 8) I exchange at any casa de cambio that has a good rate. They also break larger bills when exchanging if asked, then you have good tipping denominations.