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...I'd recommend taking a suitcase over a backpack...easy to wheel around, pack and unpack.
I did this excursion on my tour and I loved it. I was really afraid of heights but if you stand in the middle of the basket and look over rather than looking down you'll be fine.
The trolley tour of Boston, offered as an optional, is the best way to see the entire city. Take it at your own pace, but I would suggest stopping off at the USS Constitution and Fenway.
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