I tend to rent at the airport, even if it's more expensive, so that I don't have to make my way through city traffic.

I hate to spend any more money than I absolutely have to spend. On my last two trips to Munich, I rented cars at the airport and used Hotwire.com to book them. I did a quick check at the time frame you mentioned and you could get a mid-size manual for $33 US a day. I had a VW Passat Diesel last time. I also used hot wire to book a room at the airport Kempinski Hotel. Easy to find on Hotwire because it is the only 5-star at the airport to my knowledge, it worked for me anyway. I checked on Sept 8 and a room is $165. It make it easy to drop off the car, walk to the hotel, then walk to the terminal in the morning.

As far as your trip, my one suggestion would be to try and see the church at Ottobeuren. It's not too far from Fussen and is really jaw-droppingly beautiful. Since you talked about hiking, I would think a trip to the summit of the Zigspitze is a must. I was there skiing, so I can't really tell you what it's like in the summer, but the trip up (train/cable car) and the views are really spectacular.

You can rent a car right at the Munich Hauptbahnhof (train station). Did this 2 years ago and found no problem driving out of or back into city. Upon return you can take the train to the airport. We stayed in a little B&B in Bayerisch Gmain, Hotel Garni Johanneshof, which was right off the Berchtesgadener Rd. Lovely couple own it and a short walk across the German-Austrian border to some fine wienerschnitzel and strudel. I think it was an 20 minutes to Berchtesgaden and a little further to Obersalzburg

Here is what I did almost a month ago, for the third time.
Ordered my car through Gemut (www.gemut.com). Picked it up at the airport. Within the grand scheme of things (cost of flights, hotels, gasoline at $9.00 a gallon)the cost difference between MUC airport and Hauptbahnhof car pickup is not a majot M<unich traffic right after 11 hours on the plane is worth it. Arrived at 18:00hrs and drove from there east, towad the Chiemsee/Prien area, using the Munich by-pass Autobahn A-99 to get to the Munich - Salzburg Autobahn A-8 . On the return, left Prien area (my family still lives there) around 10:00AM, drove directly to the airport, to my hotel (Holiday Inn Express Airport, EUR79 night, plus EUR5 per room for airportshuttle bus). Dropped off my bags, drove to the airport, gassed up the car (EUR50 for half a tank!)and dropped it off and took the S- Bahn to the city.

Although I had lived for many years in Munich, this time took a Grey Line hop-on/hop-off bus - the longer tour - and thoroughly enjoyed revisiting the city. Skipped a bus at Nymphenburg, visited the gardens, had a great Kaffee and Kuchen (coffe and pastry) on the terrace of the Palmengarten Restaurant. On the way back - if I hade had the time - would have skipped another bus at the OIympiapark/BMW center, but got off at the University and visited my old Alma Mater. Took U-bahn (subway) back to the Marienplatz, and had dinner outside, in the courtyard of the Rathaus (city hall) and took S-Bahn back to the airport, and shuttle to hotel, where I had a good beer. Not many Holiday Inn Express have a wide selection of beer on tap, or do they?

You could do something similar: After arrival drive to Prien, stay there overnight, the next morning take the boat to the Herreninsel and visit King Ludwig's palace on the island. Then drive the very scenic German Alpine Hihghway (Deutsche Alpenstrasse)to Berchtesgaden. Spend a few nights there or in Salzburg and do some sightseeing from there. If you still want to see Neuschwanstein/Fuessen, it will take you something like 4 hours to drive there. Then return to Munich.

If you want more detailed info., holler