Hey there, I hope I can help you. I have been a MEXT researcher since October. I chose Nagoya University for a few reasons. Now, I have been accepted into Nagoya University for graduate school starting this October, so my scholarship was extended. This may get long, sorry!
I chose Nagoya University purely for research/academic purposes. My fieldwork research was based in Nagoya, the school has a strong G30 Humanities program (my research is in art history), and it is high-ranked. My Japanese level is LOW, so I needed to do a G30 program in English.
Here are things to consider.
1. What is your Japanese language level? Will you be pursuing a program in Japanese or English?
2. Your concern about passing entrance exams is well-thought out. MEXT will guarantee your position as a researcher, but you are not guaranteed a spot in the graduate program. You must pass like everyone else. MEXT has a renewal system where, if you decide to move on to a graduate program, you can only apply for two schools. If you don't pass the tests for these schools, you may have another chance or you may have to finish your research and go home.
Therefore, I highly recommend researching the entrance requirements for schools you are interested in. Programs in Japanese will be more difficult to get into and will require N2-N1. G30 programs are easier to enter and many schools support your Japanese language learning while enrolled. If you have a very strong research topic that you can get an advisor interested in and you show interest in your studies while a researcher, you should be fine.
MEXT pays for your tuition, which will also give you bonus points during the admission process if you decide to pursue graduate or doctorate level programs. However, that doesn't mean you get an auto-pass. I know plenty of MEXT researchers who did not pass entrance exams into graduate school. Thankfully, MEXT allows you to try a backup school. If you want to message me, I can try to explain this more... it is a little complicated and caught me by surprise.
Side-note: I will tell you Kyoto is not a big "quiet" city. It is large and extremely crowded with tourists. Personally, I find it more overwhelming than Tokyo.