I lived in Bowling Green, KY (south-central, KY, as they call it) for several years and before and after that I lived in Tennessee, just about 10 miles from the KY border. It *is* a beautiful state, but it is very rural and small-town-ish. The biggest city it Louisville, and even that isn't very big compared to some cities.
In my opinion, the eastern side of the state is much more like you're describing...rolling hills and lots of horse farms, etc. Where I was living was quite flat, and very rural. But if you like that sort of thing, it's pretty perfect.
Kentuckians are very proud people, just as most people in the south are. They have a deep sense of history, and as in a lot of other parts of the south, if you "aren't from around here" it takes a bit of time to get people to trust you. (I once went for an interview for a job and was asked who I knew in town. WHen I said no one yet, since I'd just moved there, the interviewee sort of pa-shawed and that was our interview over!)
It is cheap place to live, certainly. But due to the small town syndrome, salaries aren't terribly high. When I was there, they were making leaps and bounds with education, and they had started up some funding streams for small businesses and training programmes to help stimulate growth. I think the govenor (I think it was Payton? Paton?) who was initiating these programmes is gone now, but I think it does go to show that they can be quite forward thinking.
If you ever do get out there to visit, go to Glasgow, KY during their "Highland Games." It's surreal to see guys with accents as thick as molasses wandering around in kilts! There is a very strong Scottish tradition in Kentucky though....there were large amounts of Scottish immigrants there and in the hills of TN back around the time of the American Revolution (where there were some rather nasty things happening in Scotland that didn't endear the Scots to the English much.)
Ok, now I'm getting homesick!!!