Since you are so young, and it sounds like you are extremely well-grounded you will probably return to Europe many times. Thus it is not necessary to see a lot, but understand and appreciate what you do see. I was little older than you when I first visited Europe and with rare exceptions, we travel with the idea it is better to see a few places well than many poorly.

I would skip Pisa, most people find it a big disappoinment. As for the other sights listed some with will take a few moments like Trevi Fountain and Piazza Navona while Monserrat, for example, will consume the entire day.

Good luck and I am sure you will have a wonderful time whatever you choose.

Sorry, Teh Rastro only exists on Sunday morning into the early afternoon. Here is an excerpt from a trip report of mine regarding the Rastro.:

I am standing next to a framed poster of a toilet system. Sunday morning at El Rastro, an outdoor flea market, finds possibly a thousand vendors, that weaves in and around an area near the Plaza Mayor. It is the grandeur of junk, an old fashioned diving bell helmet sits on the ground waiting to be purchased and the pure practicality of inexpensive clothing, and the same sophomoric T-shirt humor found in English, now available in Spanish-Sex Instructor-First Lesson Free. Ramones T-shirts were also on sale at more than one stand. Women, seeking their size, flip bras into the air from a blanket on the ground, which is covered with what looms like sand dunes large and small.
You hear the gravelly voice of old Spanish men and women; others look like Uncle Junior, while the tragically hip look for the de rigor sunglasses. The tradition of El Rastro is 500 hundred years old and I think one of the original vendors is still selling socks.
It has a reputation for pickpockets which is countered by a large police presence.

The nice thing about planning far ahead is that your minds have already begun the trip and part of you will be in Europe from now until takeoff.
Two things you can sort out now so they are out of the way. One is to arrange your passport; your friend must already have one. The other is money. There is lots of discussion on this forum about how to carry your cash but I am with the majority in favouring plastic -- credit and ATM debit cards. Even at your youthful ages, having two accounts each is wise, with different banks, one Mastercard and one Visa. Once on the road, take out a substantial sum of Euros at once (at least it's all one currency for your route) so you are not incurring the substantial transaction charges Canadian banks impose for small purchases you might take for granted back home. You can give some thought how to secure cards and cash if staying in hostels. Sure, start now; you've got lots of time.
Since I first went to Europe at your age, I will offer a grey-haired philosophy about your tentative route: You don't "see" Europe by checking off a list of multiple destinations. Settle in for a few days in each location to get a feel for the place. Nice/Monaco could be one stop since it's an easy commute. No sense staying in Montpellier, although pleasant, over night just to see another triumphal arch when Avignon, a short way to the north, could keep you occupied for several days.
Knowing how people do their laundry or read the sports news over morning coffee matters as much as staring at monuments for a few minutes to see if they look like their postcard pictures. And always, in the back of your heads, you can be taking notes for your next trip.

Looks like the start of a good plan and I wish you well. My thoughts are pretty simple

When? Try to avoid mid July to the End of August. The whole of Northern Europe goes on holiday for 2 weeks sometime in that period and majority head to where you are going to be. Accommodation and public transport creaks and it gets pretty hot.

How? Dig into Skyscanner and discover the joys of cheapo airlines and the train web sites of the countries RENFE, SNCF, TRENITALIA each have a national website and while the last one is a test of your patience they give you some ideas. Buses tend to more city or provence based than country wide. Dig out the city website and follow the leads.

Where, I'd drop Pisa but try to get Florence or Siena in. (World class sites and sights). I'd also look at Nimes, Arles, Avignon, Carcassonne into your southern france list and might dump Nice but it's your trip. Oh and Grenada might be worth a quick wiki scan to see if it interests.

Trains in europe are a very practical, clean, safe etc (and if booked correctly very cheap) way of getting around. Midday on Saturday seems to have the best prices rather than Friday night at six...Flying looks cheap until you have to get up at 4am to sit at the airport until 11 to catch a one hour flight that takes you to an airport miles from a city centre with the result that you spend a day to do a 2 hour train journey (and of course you can picnic on a train).

You've made a very good start on the planning; I'm impressed. I assume you're flying into Venice and out of Madrid. Though you could also fly into Rome.

And good points from Bilbo. Definitely do the train for most of your traveling. You'll have to analyze in detail to figure out whether a train pass would be better than point-to-point tickets (bought early to get the discounts). If you have a pass, you may also have to buy a seat reservation for the faster trains, and the number of seat reservations for pass holders may be limited.

I disagree with Bilbo about Nice. It's a beautiful city with great charm and excellent public transportation links for daytripping along the Riviera. For example, Monaco is an easy daytrip by train from Nice as are Antibes and Cannes.

Carcassonne is generally considered a drive-by. It and Toulouse are outliers on your route so you might consider dropping them for Aix-en-Provence, Arles and/or Nimes. Or just more time on the Riviera.

You're going to have a great trip.

Duplicate all of your documents..leave a copy home..email one to yourself. If you lose them or are robbed, which is not a far fetched thing at all, you can access the info quickly and get them reissued.A small hassle yes but if needed you will be glad you have them. Do not stand with your back to an open door on a bus, metro, train as these snatch and grab guys are slick...

All I have to say is, many people twice or three times your age could learn from you two on how to plan a trip! Looks like you've made a great start in plotting out an initial itinerary.

With this itinerary you are going to be spending a lot of time on trains. When I remember my student days backpacking through Europe, I remember the places in between the trains rides, and not the rides so much. I know that you girls want to see alot, but one of the greatest parts about this kind of adventure can also be the people you meet, which becomes really difficult on a whirlwind tour.
I strongly recommend limiting yourself to two destinations per week, and if you have time for more, you can always wing it, but I would not plan it.

Look at www.lostgirlsworld.com and www.legalnomads.com for practical advice on traveling for and by young women.

The only issue I have with your schedule is that you could wind up spending your whole time hangin' out at the hostel with other English speakers. Beware of that time waster, and have a great time!

Wow, thank you to everyone who posted regarding our trip! Your tips and well wishes have really helped us plan our trip further.
Aduchamp1: We're now thinking about taking Pisa off of the itinerary, and thank you for the lovely insight on El Rastro!
Southam: We will definitely take into account your advice on how to properly handle our money on our trip. Additionally, you are SO RIGHT about seeing Europe through the eyes of a European. This is what we look forward to especially. We are definitely going to attempt to enjoy the culture in all of the destinations that we have picked, and if we need to take some cities off our list to do this, we will.
Bilbo: On the "How" section of your response, it is unfortunate, but the only timeframe that is free for us to travel in 2013 is during the summer. We are both full-time highschool students and cannot miss time during the school year. The earliest that we could embark on our journey is the very beginning of July. We would start school on the second week of September. As for the "When" section of your response, I have been looking into cheap flight sites, and I've found a bunch. What do you think about Hipmunk or Kayak?
Mimar: We are planning to do the vast majority of our traveling by train, although we still need to revise our plan in detail to determine if we want to buy a Eurail pass or just buy the singular tickets.
Amer_can: Thank you for the advice on keeping our documents safe. We are going to make many copies of our documents and will try to read up as much as possible about how to keep our valuables safe from theives.
Apres_Londee: AWH! Thank you so much! Your comment made us feel great. At this time where we can't even be sure if we will do this trip, you gave us some hope that this will happen. This is the tripof our dreams. We've both been wanting to do this trip since we were little.
Phread: Limiting to 2 destinations per week is a very good idea. We are strongly considering this.
Ackislander: We do not plan on hanging out in the hostels for the trip. We will be getting up bright and early to explore the cities!
Additionally, can someone please advise us on the trains and what passes/ tickets we should be buying? That is the biggest confusion that we are going through right now. Thanks!

Hipmunk or Kayak?

No idea, I use skyscanner to see if there are any flights and then check the airport websites to see where it is (Ryanair would put "New York" in Ontario if it meant getting a lower cost) then book with the cheepo airline direct.

Trains I'm not an expert on the Interrail process, but if you surf on this website you should get go info. I tend to book point to point, generally in France travel during lunch and at the weekend as prices drop drastically. In France it is SNCF, Italy TRENITALIA and Spain RENFE. You may find that your local internet will try to get you onto your local website (who will then stiff you by overcharging) so stay on the local site or if need be go onto the uk site ***.co.uk as they are less likely to stiff Brits as those from further away.

Now it does get difficult but basically you need to buy second class tickets and sometimes you need a reservation as well (but the site will tell you), with skill you buy the ticket where you are now with a credit/debit card and you pick the ticket up on the station at a machine when you feed your card back into it. But there is tons of useful stuff on train travel at Mark's http://www.seat61.com/

Bilbo: Thanks for your reply! We will look into the sites you listed.

I think you have a good beginning of a plan.

There are a couple of issues:

How are you with really hot weather. The most budget accommodations often do not have AC - so assuming you will need AC if it is 95 and humid - make that a primary requirement - which means searching for lodging as far in advance as possible.

Budget - don't know how much you have done with this but I wuold start assembling one now - based on specific prices for EVERYTHING yuo will be doing. Last summer my younger daughter and companions ran into a couple of young american women who had either underestiated hte costs or not spend carefully - and they had 3 days left before their return flight - and no cash or credit left. My DD helped them get in touch with the parents of one who somehow got them enough money for lodging and food for the remaining days. Don;t underestimate how expesnive things can be - and have available 50% more than you think you will need.

Monaco - a big waste of money. Has little to see except very wealthy people shopping in the most famous designer shops and eating in incredibly expensive restaurants before going back to their absolutely enormous yachts in the harbor. (My DH and I go to the casino when we are in the area as a hoot - to see the people imitating those in James Bond movies. But - we can do that for the fun without breaking our budget.)

I second the use of SkyScanner - available at http://www.skyscanner.com or as an app for your Android (I haven't checked if there is an iDevice version).

I'm traveling through Europe this summer - Norway/Denmark/Germany/Sweden/ and have used SkyScanner to guarantee me the lowest possible tickets.

I wish I had caught the travel bug at your age, girls.

Enjoy yourself, but above all, BE SAFE! Please don't become a statistic or a 60 Minutes special.

Eric