I think there is plenty to keep you busy, and exploring the Alps would probably be more relaxing than staying in a city for a full week. I went at the end of June a few years ago, and this is what we did in or near Munich/Saltzburg/the Alps, plus how long we were there - hope this is helpful:
Munich - Dachu, BMW Museum, Hofbrauhaus, and day trip to Rothenberg (there for about 2.5 days)
Saltzburg - Sound of Music Tour, Hohensalzburg Fortress, Mozart's Birthplace, and day trip to Berchtesgaden Salt Mine (there for about a 1.5 days)
Annaberg, Austria - white water rafting, hiking, and mostly relaxing (there for about 2 days) - I believe there are a lot of little ski towns that have activities similar to what you would find in Colorado in the summer.
However, if you do decide to go to London, it is pretty easy to take a train to Scotland, which has been the favorite place I have visited.