The emperor has no clothes. This place was mediocre at best. The staff hovered, the flavors were bland, and they substituted the "rare" artisanal items on the menu with more common ones, excusing themselves with the answer of "sorry, we're out of that." The terrace is nice, and I imagine it would be a lovely place for a drink, but this isn't a bar, it's a restaurant, and as a restaurant, I would say it's a cleaner version of what you can get in the market. I may be a San Francisco food snob, but i've eaten at the best around the world, and Casa Oaxaca IS-NOT one of them.
To be honest, I don't know where to send you in Oaxaca. Honestly, I think you're better off hiring a provate cook if you're here for any length of time, because all this town seems to have is good bars that have mediocre restaurants in them.
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