A surprisingly pleasant city with many fine houses and the lake area with evening dining in inexpensive restaurants is very pretty.
Of course the real attraction is the visits to the hill tribes but on the way you will find yourself driving through seriously beautiful landscape with rich farmlands in the bottom of the wide valley surrounded by green hills. Visiting the tribal people is already very tourist oriented but still worth it. Part of the deal is that you buy their handicrafts but you shouldn't feel too pressured as they are still very friendly people whether you buy much or not. The Eng people in particular we loved - they were the original nomadic inhabitants of the area before the arrival of the Shan people from China who brought agriculture into the valleys. The Shan are now the dominant people of the region and other tribes such as the Lahu and the Akha (with their magnificent head dresses of silver coins) supposedly arrived later - the Akha apparently from Tibet. Back in KengTung, the vast and sprawling central market is also worth a visit and there you may well encounter the odd tribal in a visit to the city as well as reasonably priced tribal wear in a few shops. Last of all, we highly recommend our guide, Freddie, or Yoktam who speaks Shan plus two other dialects and near perfect English and has a great rapper with the tribals. Insofar as visiting the tribals I would recommend taking your time and not trying to rush around and tick off too many villages and places in a hurry. WE spent a while day inside one house of an Eng family who happened to be having a wedding that day and had a great time - always when traveling it is quality time with people and genuine interaction that gives both parties the most satisfying and rewarding experience instead of madly rushing around clicking your camera and ticking off bragging points.
It can be hard to find someone at times who speaks English - for most their first language is their native tribal language, followed by Shan and then Thai and Chinese (because they are so close to the borders).
Very few even speak the national language of Myanmar. Get out of the city and do a trek up in to the mountains to see the different tribes that live there. They have different difficulty levels - we had a easy one because of our kids, so don't worry if you aren't that fit. The Central Market is a great place to find all the blackmarket goods that come across the border...but be prepared that they don't really barter here as the prices are really cheap anyway.
Keng Tung was historically the main city of the Shan States, which were never fully incorporated into British colonial Burma, and even now are not quite accommodated to a subordinate role within the present Union of Myanmar: although the Shan armed resistance is pretty much over these days.
The Shan people are much much closer to the Thai, the Lao, the T'ai uplands ethnic groups, and the Dai-Lue of Sipsong Banna (Yunnan, PRC), than they are to the dominant Bamar people of Myanmar. Their style and intensity of Buddhist worship, their architecture, and their iconography are all extraordinary and beautiful, and Shan people are delighted to discover foreigners who actually know something about them and their admirable history. Keng Tung city, which now can be easily travelled to by air (or overland --but only from the Tachileik border town opposite Mae Sae, Thailand) for foreigners holding previously obtained Myanmar visas, is extraordinary on many counts and much worth visiting... Although once you get there, either you have to retrace your steps back to Tachileik (six hours by local bus, or half that by taxi/van), or face up to buying very pricey air tickets to Heho (Inlay Lake), Mandalay, or even Myitsone in the far northern Kachin State. The geographic setting is superb, and there are evidently inexpensive and easily-arranged guided treks to the surrounding highland and minority villages. If before going there, prospective visitors familiarized themselves with the stories of the Vessantara Jataka (Wethandaye in Burmese, Wissan Jat in Shan), which are illustrated --usually in gold stencilwork on every Shan Buddhist temple I've ever been to), you'll be treated like a king, or at least a visiting scholar.