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Rosetta Stone, which I use for learning, uses konnichiwa (こんにちは?) as a generic "hello". But when visiting Kyoto and places around there, I have never heard anyone actually saying it, not even a single time. Do they use another standard phrase instead? I would like to use a natural phrase to initiate conversation with strangers, for reasons like asking for directions and such.

Perhaps you have to give up on the idea that "there should be a perfect equivalent of hello in Japanese (or in Kyoto)". Different languages have different sets of greetings. Some common phrases like いってきます and よろしくおねがいします are difficult to translate to English.

Where you expected hello, you might have heard いらっしゃいませ, どうも, もしもし, すみません or おつかれさまです instead. None of them are perfect equivalents of hello, but used in various situations where hello can be used in English. Indeed, tourists are not likely to hear こんにちは, which is mainly used at school and workplaces. In your case, the phrase you need to stop a total stranger on the street is すみません, which is closer to excuse me.

Japanese greetings depend on many factors.

Local dialects

There are many local dialects and the Kansai region (including Kyoto) famously use their local dialect quite frequently. They'll usually use standard (Tokyo) Japanese vocabulary with foreigners as they don't expect you to have learned their dialect. They might have a slight regional accent but you will be able understand them (unlike rural areas that they need to give subtitles for on national TV). One notable difference is that they will say おおきに instead of ありがとう. This is regarded as old-fashioned but they'll still use it if you buy something from a gift store. However, you won't be greeted in local dialects. Other words such as めっちゃ originate from Kansai dialect but are widely used in modern Japanese. Many actors and comedians come from this region so most Japanese people are familiar with some Kansai dialect words. However, they still study Japanese in schools and you can use standard Japanese and will be understood (anywhere in Japan).

Situation

Many Japanese greeting depend on the situation. You would not be expected to use these but you may hear them used around you. もしもし ("hi") is a greeting specifically for answering the phone for example. Staff will greet you to enter a store or restaurant with a more formal greeting いらっしゃいませ (please come in). Colleagues will often greet each other with おつかれさまです (you work hard). When leaving home you say いってきます (I'm leaving) and they reply いってらっしゃい (come back soon). When you return home, it is customary to say ただいま (I'm home) and be greeted with おかえりなさい (welcome back). When meeting someone after a long time, they say ひさしぶりです (hey, it's been while). In these cases you could say こんにちは but it is not needed in these contexts. You will be understood if you do not use these but it may explain why greetings (such as those discussed below) are not used as often as you might expect.

Time of the day

Using こんにちは as a greeting is completely acceptable but it depends on the time of day. こんにちは(今日は) is better translated as "good day" or "good afternoon".　In the morning, it's common to use the greeting おはよう (it's early) for "good morning". In the evening, they use こんばんは for "good evening". Note: おやすみ[なさい] "good night" is wishing someone a good rest and is not used as a greeting.

Interacting with strangers

すみません has far more uses in Japanese than "sorry" or "excuse me" in English. Understanding this is important in Japan. These uses include attracting the attention of staff at restaurants and store or asking for help such as directions. It's also used a lot to let people know you need to pass by or apologise for bumping into them (Japanese stores are small and train stations are very crowded so you will use this a lot).

こんにちは.

That's how you properly say hello in Kyoto. One way out of many of course depending on the situation (but I really did not think I had to specify this!). Like pretty much everywhere else in Japan. It's standard Japanese, and Kyoto is no exception.

Now, if you talk about slang or dialects, it's a different story. However, as far as I know, こんにちは is still a common choice there when it comes to greetings.

Consider this though. Your personal experience is probably too limited to draw conclusions just because "you never heard it". How long have you been there? Did you really spend all your days eavesdropping trying to catch people saying "konnichiwa"?

On a side note, I found this blog discussing Kyoto dialect. A very famous thing about this dialect is おおきに, which generally means "thank you". However, according to this source it is actually used in a much more broad sense:

「おおきに」は「ありがとう」という有名な京都弁ですが、

実際の現場ではもっと多様な意味で使われています。

特に商売人の方とお話するときは、

まず開口一番「おおきにぃ～」（＝こんにちは、おはようございます、お邪魔します）、

話してる途中でも「おおきに！」（＝その通り、同意見です、うれしいです）、

帰りしなにも「おおきに～！」（＝さようなら、また明日、ごきげんよう）

と、かなり便利にいろんな意味で使われています。

You can see on the fourth line that it's also used at the very beginning of a conversation and could bear the meaning of こんにちは、おはようございます、お邪魔します.

EDIT: However, according to Chocolate's comment, who I believe is from Kyoto, this is not entirely correct, so take it with a grain of salt. After all, the fact that (supposedly) a Japanese person wrote the blog doesn't necessarily make it true.

Just to add one more thing, you might have heard おはようさん instead of おはようございます, which is also quite popular. For your reference, you can find a collection of expressions in Kyoto dialect here.