El Picacho is a small hill (with a nicely easy hike) right next to Teotitlan del Valle, with an excellent view of the valley, dam below, and the sierra norte.
You need to ask permission (and pay a small fee, 30 pesos) to the museo comunitario. Teotitlan del Valle is a Zapotec community and land is owned and managed communally.
This arm of the Oaxaca valley is easily accessed via collectivo/bus from either the second class bus station or the bus stop area near the baseball stadium. This is one of the most popular routes in all of the Oaxaca valley with busses leaving every 15-30 minutes during the day. From Mitla, you can catch a pickup truck to Hierve El Agua. Given that dozens of people do this trip everyday, it will be very straightforward.