Couple questions about the German Rail:

1. Is there an extra charge for the ICE (Premium) trains for any of the rail packages? If so, how much?

2. The "German Rail 'n Drive" package mentions rail travel for 2 days. Does this only mean two consecutive days?

3. How convenient is it to take the train to the Hohenschwangau and Neuschwanstein castles?

4. How are the "2 Adult" tickets regulated? My friends and I plan to travel together, but we plan to split on the "2nd" day and travel to different places. Will we still be able to use our "2 Adult" tickets? Three of us want to add add'l days, but want to still use the "2 Adult" rate, is this going to be possible?

Any other advice on using the German Rail or the German Rail 'n Drive package?

Thanks in advance.

Generally a supplement is not required to ride on ICE's unless you are reserving a specific seat (seat reservation).
I cannot comment on the specifics of the Rail n' Drive package but whatever agency you are buying it from should be able to answer that question..or perhaps someone here can.
To check schedules use this site:
http://reiseauskunft.bahn.de/bin/query.exe/en

Depending on where you are traveling from, the closest towns with scheduled rail service to Heuschwanstein are Fuessen, Oberammergau, and Garmisch. There is bus serviuce to the castles themselves from these three towns. Changes may be required if you are traveling by train from Munich (in Buchloe for Fuessen and in Murnau for Oberammergau). There is direct (no change) service from Augsburg to Fuessen and periodic direct service to Fuessen from Munich (you'll need to check the schedules). Trains are frequent to all these places throughout the day.
Are you speaking of the "two people traveling together" passes(the Eurailpass Saver)? As I recall the pass is issued with the stipulation that "two adults [must be] traveling together "at all times." Again, you should be able to find out the answer by CALLING the issuing agency (in the case of RailEurope). It's up to you but in terms of procedural questions like these I would hesitate to rely on the opinions of others vs. the issuing agency's advice.
Hope this helps some and have a great trip.

Not many places sell the Rail & Drive passes, so we bought ours from Raileurope last year. Lots of info on their site.

You can add additional rail and/or car days to the basic package, see the chart on RailEurope. Car days need not be consecutive.

The SaverPass is ONE piece of paper. All people included on it MUST travel together.

Thanks for all the advice. Have you taken the train from Munich to Berlin? Are there any cities worth stopping along the way? Would you recommend just driving to Berlin from Munich and stopping at these cities?

To the car issue for a moment...realistically, if you're going to have the car for a couple of days and want to do the Ludwig castles around Neuschwanstein you might want to use the car for that. I love taking the train there from Munich but I think for flexibility I would advise you to drive. Don't forget, there is also a palace near Prien..the Herrenchiemsee..located on an island in the middle of a lake (easy train trip from Munich) the interior of which is much more impressive than Neuschwanstein (as is Linderhof) but it is a palace a lot of folks don't consider traveling to (very popular with the locals, hwoever). Another edifice I would consider is the Residenze in Munich itself as well as the Nymphenberg Palace (easy tram ride from the center of Munich with no changes involved). Again, I do not think you need a car in Munich itself.
As to the train from Munich to Berlin..yes, I've taken it several times..usually take one of the frequent ICEs.
I have never stopped of en route because I have visited many of the towns involved..and there are several routes the train can take from Munich to Berlin..or, I should say you can route yourself in any number of ways...through Augsburg, Nurnberg, etc., etc.
You do not say how long you are going to be in Germany so it is a bit difficult for me to advise you about what other places to stop off and see. You could easily spend a week getting from Munich to Berlin.
Berlin can take up SEVERAL days depending on your interests, especially if they include seeing the palaces in Potsdam (the "new" and also Sans Souci) not to mention the others in the city itself.
I am sorry if this isn't helpful and I do hope you have a great trip.

I would also recommend a car outside of Munich. As Intrepid pointed our, there are a lot of places to visit that are much easier by car--I'd add Wieskirche and the southern Austrian Alps to the list.

Not sure it would be on the most efficient train route, but Bamberg is an absolute gem of a well-preserved town between Munich and Berlin. Has enough tourism to provide amenities, but it's not swamped with visitors.

Earlier this year prior to a trip to Germany I posed the question here of Heidelberg vs. Bamberg...Bamberg won in an absolute landslide.
Another note on Berlin: there is a LOT more to do there than just palaces but you probably already knwo that.
Again, enjoy your trip.

Just outside Bamberg is Colburg. It too, is a gem of a city. The fortress there is unbelievable. It houses one of the best Museums in the region.
Have a good trip!

We will be in Germany for 12 days.

Day 1 - Munich
Day 2 - Munich
Day 3 - Hohenschwangau and Neuschwanstein castles and area then drive to Fussen/Bodensee/Lindau
Day 4 - Bodensee
Day 5 - Drive back to Munich to catch the train to Berlin.
Day 6 - Berlin
Day 7 - Berlin and a day trip outside of Berlin - Any recommendations?
Day 8 - Day trip outside of Berlin
Day 9 - Go back to Munich
Day 10 - Depart.

I will be enjoying Oktoberfest in Munich and sightseeing (recommend things to see?)

I will rent a car to see the castles and Bodensee. You mentioned Prien, where exactly is this located? Also, I have read several posts that the castles (Hohenschwangau and Neuschwanstein) are not worth seeing. I have been to major castles/palaces in Austria, France, etc. Are these castles any different?

After spending half a day in the castle area, we will drive to the Fussen/Bodensee. Spend the rest of the day driving around the area and the half of next day. Is there anything else worth seeing in the Bodensee area?

After Bodensee, drive back to Munich and probably catch the train to Berlin. Depending on what kind of ticket we get, we will either stop at the cities recommended in this post.

Recommend any cities outside of Berlin? If, so can they be easily accessed via train?

Any other recommendations to my agenda?

Can't imagine why anyone would say Neuschwanstein and Hohenschwangau aren't worth seeing. Neuschwanstein is an astounding confection--the product of a disturbed soul with a great deal of wealth. I don't think the impact of Ludwiq's tragic story can be fully appreciated without at least viewing Neuschwanstein in its fairytale setting.

RE: Neuschwanstein

The people who don't like it usually complain that it's not "old". Yes, that's true, it was built in the 1880s, but it was worth seeing to me, even though I have a preference for old, near-ruins, otherwise.

Prien is on the main railroad line from Munich to Salzburg (about 55 miles southeast of Munich...you can also reach it by car). If you are planning to see the palace at Herrenchiemsee you actually must take one of the lake passenger ferries from the nearby port of Stock...the trip across the lake takes less than 30 minutes.
The whole setting around Neuschwanstein is very picturesque..the so-called Koenigwinkel or perhaps it is winkle..anyway, it is the INSIDE of Neuschwanstein that isn't as impressive as the Linderhof of Herrenchiemsee but I think it is definitely worth a trip. And if you're driving you might consider dropping in on Oberammergau which is about as picturesque a village in Bavaria as it gets.
Interestingly, Ludwig is known as "Mad" and died under very mysterious circumstances (there is a continuously-running muscial event near Fuessen that recounts the entire story to include Ludwig, literally, walking into and drowning in a lake on the stage in the last scene) but given the fact that his artchitectural creations are one of the biggest, if not THE biggest tourist draw in Bavaria makes one wonder just how mad he really was. Again, enjoy your trip.

And if after all of that byou aren't castle/palaced "overdosed" a nice, easy day trip from Berlin is to see the Sans Souci and "new" palaces of Frederick the Great at Potsdam (your passes will cover the short rail trip)..but you'll probably have plenty to see in Berlin itself which has become a wonderful combination of the old and the stunningly new...the Reichstag as well as the new steel and glass around the Potsdamer Platz are definitely worth a look. Take in the absolutely legendary food hall on the 6th Floor in the KeDeWe department store (the largest in Europe superceded only by Harrods). Berlin is, as I may have said earlier, VERY different from Munich..the latter is considered the buckle of the German "Bible belt" by some whereas Berlin, to many, embodies the "new and modern" Germany but the fabled decadent nightlife is still very much in evidence.