I grew up about 2 hours south of Lexington... it is a cool town that most people who visit seem to like. People from big cities seem to think it is small, but, to me, it is pretty large (my hometown= 6,000 people). The campus is nicer than average, but not as nice as some others in Kentucky (my alma mater, WKU, is considerably better looking). The law school isn't very aeshetically pleasing, but it does have somewhat of a charm to it.
As far as a UK degree... it is the best in Kentucky. In fact, there are few schools (maybe none except Harvard and Yale) that are more highly respected in the state of Kentucky. That may sound like hyperbole (and it may be a bit of a stretch), but a UK degree opens a lot of doors within Kentucky. As far as outside the state- I wouldn't know. What I do know is this- Kentucky gets a bad national reputation for being a state full of under-educated hicks, but you shouldn't knock Kentucky until you give it a fair shake. I love it here.