It's been a while joannyc and time has slipped away. The 1st time I returned a car in a different city in Germany there was no charge. usually we fly in and out of the same airport.
If I were the OP I would make sure and take it from there.

Normally there are no extra one way charges for rentals in Germany . At least not with the major companies like Sixt, Avis, Europcar, Hertz. Maybe some smaller companies do charge so it never hurts to read the fineprint. But as a "rule", the only extra fees connected with your choice of pick-up location are for renting from (but not dropping off at) airports and train stations.

As an alternative, suggest you fly into and out of Frankfurt. Drive the Rhine and Mosel valleys and continue into the Harz mountains before heading back to Frankfurt. After the Rhine, it might be less crowded than Bavaria and certainly more pleasant, temperature wise, in the Harz mtn. area. The Harz certainly are not big mountains but nevertheless very enjoyable. You obviously could also consider tying in Munich with the Black Forest. Many possibilities exist as you travel Germany.

In March, my wife and I are flying into Milano, training up through the Dolomites on our way to Garmisch. There we will rent a car, drive to the Ore mtn. area, drop the car in Chemintz, and train to Berlin. Then train to Hannover to visit friends and on to Amsterdam before flying home. This all in 3 weeks. Not everyone's cup of tea but it works for us.

Huggy - the Harz was pretty crowded in September when we were there, though that was a weekend. Werigerode appeared to be full and there were lots of people in Goslar, Quedlinburg, and up on the Brocken.

I should imagine it's worse in July/August.

Ann:
I can imagine the crowds on weekends.

Have been there twice but during the week in December and July. Obviously a bit more crowded in July but still quite manageable, more so than say Bavaria. Went to the Brocken both times and I was surprised that winter did little to slow travel to the Brocken. We spent nights in Braunlage and Bad Harzburg where there was less traffic as compared to Quedlinberg.

Just trying to give alternatives the OP with a wonderful part of Germany which sees less traffic than most other parts.

1.) "In Germany and Austria we want to explore beautiful scenery, see castles and churches, and pretty towns."

2.) "We are after mountains."

3.) "Another possibility is in to Frankfurt and out of Paris..."

4.) "...it would actually be easier for us to fly in and out of Frankfurt..."

If you intend to see Paris, #3 makes sense, but not otherwise.

For #1: Fly into Frankfurt, head to the Rhine/Mosel for a few days, as 'bookworm suggests. Marksburg and Eltz are both real, intact castles that have never been destroyed and offer great tours. Rheinfels ruins is good too. Wonderful villages and scenery...

Oberwesel: http://s1.germany.travel/media/conte...T_1024x768.jpg
Bacharach: http://upload.wikimedia.org/wikipedi...arach_BW_9.JPG
Boppard: http://media-cdn.tripadvisor.com/med...king-rhein.jpg
Linz am Rhein: http://www.linz.de/pdf/Linz_Prospekt_2007.pdf

Nearby Mainz offers some interesting churches including the Romanesque Dom, the St. Stephan church (Chagall windows) and the Augustinerkirche.

For #2: Head to Switzerland for several days for some real mountains - the Alps. It's roughly 5 hours by train from Mainz to Interlaken, gateway to the Jungfrau and the Schilthorn.

Then stop in the Alsace as suggested. Head either to Paris or Frankfurt to fly home.

Huggy - of course, i understand why you mentioned the Harz, but I'm not convinced that they are less visited than other areas; its proximity to Berlin seems to put paid to that.

Yes, this is our first trip to Germany. There are more flights open in and out of Frankfurt than Munich; I only mentioned Paris because there were flights open. We were just there in October and I'm not really in a hurry to go back.

Thanks for all the suggestions. We need to book flights so that I can do some actual REAL planning.