I'm little confused -- usually, i just go to an ATM for cash and the best exchange rate. Is this not possible on Ambergris?

Several ATM's, but they have been known to run out of money. Of course it will be BZ$. Check with your bank to see if they charge a service fee. It's different for Belize than in Mexico. Exchange rate is the same everwhere 2(BZ$):1(US$) no matter where.

Oops, my bad.

We usually use Traveler's Checks