I recently went down that road, to malavalli and then onto kollegal. The road is pretty good all along. Coincidentally I too was going towards ooty, infact to ooty, but at kollegal I turned west and headed towards nanjangud and then caught the mysore-ooty highway.
Some words of caution, eateries are pretty much non existent on that road, and at kollegal even after half an hour of hour I couldnt find any decent restaurant, forget decent the only one I could find was a shady nonveg restauarant, and the only veg dish they had was roti with some funny sabji and a weird fried rice kind of thing called pushka. At harohalli a little inside the town you can find good restaurants.
In case you want to do what I did, the road that goes directly from kollegal to nanjangud via Tirumalpuru Narsipura is in really bad shape, but it is an internal village road, where you would be riding along fields almost all the time, but it would be next to impossible to ride on a roadie, I was finding it hard to ride at 15 on an mtb in certain stretches. But right now the fields are all empty, and hence the scenery isn't as exciting as one would expect.
-Karthik