Good question, should've added this earlier. Coming from Adelaide, Australia.

Lautberrunnen could use a day or two more - so many varied things to see and do besides climbing high-up summits.

Still not sure why those German towns - Stuttgart are on your list except for maybe car factory tours?

Car factories (for my friend), and there was a well reviewed castle hotel next to the Black Forest that I was interested in.

Have been reconsidering that, but as of yet not sure where to go instead. Have heard recommended from Konstanz a train trip along to Offenburg. Alternatively Fussgaenger above recommended Switzerland, Konstanz - Lindau - Meersburg - Friedrichshafen, the Black Forest then move on to Munich.

Just my 2 cents and apologize if you have responded to this comment before...I did not read all the above posts/ Your itinerary is very city heavy. This goes back to personal taste ofcouse but to me the best part about europe is the stunning scenery, mountains, lakes. If possible I would add a day to Lauterbrunnen. lots to see and do there inclung maybe a quick (2hrs or so) to Lake Brienz. Also we enjoyed Salzburg more than Vienna (ofcourse this goes back to personal preferance)bu we felt it was more contained, quaint, beautiful gardens, archtecture etc. Also the lake district (lake wolfgang see) in Austria is stunning (not far from Salzburg). In Italy a few hours from Venice the dolomites region is not to be missed. It was one of the main highlights our trip to N. Italy and Switzerland.
If scenic beauty is of less int than history, museums etc then you may be fine but I just wanted to share with you my perspective.

"If at the top of my list is Germany, Iceland, Hungary and Austria, what would be recommended?"

I recommend you do these four, since they're the top of your list. You could probably also go to Venice.

Never been to Iceland so I can't help you there, and have only been in Hungary for a short time--near Sopron and Esterhazy (interest in Joseph Haydn brought us there.) Beautiful rolling plains--quite different from most of Southern Europe.

Since you're going to Oktoberfest in Munich, I'd concentrate on southern Germany and western Austria. You could stay in or near Innsbruck, Austria, and have beautiful mountain views, hiking, etc., Innsbruck is a fairly small and beautiful city.

Salzburg, Austria is not too far from there, and you could go to Hallstatt, St. Wolfgang, and other scenic and charming towns and cities in southern Austria and mountains in southern Germany.

You might also go into the Dolomites region of Italy (over the Brenner Pass) to see a number of charming towns and small cities.

I have been to Iceland and there's nothing like enough to do to justify 6 days, even including travel, in Reykjavik. IMO you need to look at where you want to go in Iceland and how you're going to get there - public bus, hire car, guided tour? there are some day trips you can do from Reykjavik [primarily the Golden Circle] and there's enough for 1-2 days' sightseeing in the city if you walk slowly [don't miss the National museum of Iceland] but you really need to get out and see things.

Thanks all, I appreciate the continuing help. Some changes, looking more like:

Rome (3 full days + 1 day travel)
Florence (2 full days)
Venice (2 days including travel)
Lauterbrunnen (2 full days + 1 day travel)
Lucerne (1 day including travel)
Konstanz - Meersburg - Friedrichshafen - Lindau (2 days including travel at each + travel)
Munich (3 full days + 1 day trip + 1 day travel)
1 day stop on the way to Vienna (yet to decide, maybe Český Krumlov, or has been suggested Salzbury)
Vienna (2 full days + 1 day travel)
Budapest (3 full days + 1 day trip + 1 day travel)
Copenhagen (overnight)
Iceland (6 days, including travel)
Berlin (4 full days + 1 day travel (+maybe 1 day at Dresden))

"I have been to Iceland and there's nothing like enough to do to justify 6 days, even including travel, in Reykjavik"
-Thanks for the advice. We likely weren't going to stay in Reykjavik for more then a few days, but this is the most flexible part of the trip, so still deciding on our options. Good chance we'll hire a car and circle the country.

Likely Konstanz - Offenburg - Karlsruhe - Munich instead

Khadidhea - I suggest that you do some work on how long each of the transfers from one place to another is going to take before you go any further. you are allowing yourselves very little recovery time between each place - by the time you are half way through this trip it will all be a blur and you'll be longing for some time when you can just sit and stare.

<<Thanks for the advice. We likely weren't going to stay in Reykjavik for more then a few days, but this is the most flexible part of the trip, so still deciding on our options. Good chance we'll hire a car and circle the country.>>

Not in 6 days you won't. you'd just be driving all day, every day, even if you spent no time in Reykjavik at all. try looking at the specialist Iceland tour companies [eg Discover the World] and see what they offer for 3-4 days in Iceland. I'm not suggesting that you use their services, but they do give a god indication of what is feasible and how to see the highlights.

There is LOTS to see and do in Iceland..and 6 days is not enough to experience it all. Try and identify what parts of the country you would like to see and plan an itinerary based on that. Accommodation in Iceland is increasingly sparse, so I would try and book somewhere ASAP. Coming from AMerica stopping at Iceland on your way to Europe or home is surely the most logical option...it is a 4 hour flight from Germany.

Check out this blog for some ideas for Iceland

http://www.iceland24blog.com/

Not sure about now but when I was in Iceland it was outrageously expensive for anything but fish! After the economic collapse maybe not but bring whatever you will need and can carry, except fish. Thanks for all the fish!

I like Iceland and had a great time there, but, and there had to be a but, it has to be in the second range of places to visit Europe for not the first tier.

If you do go, you must do a bunch of spas (see also Hungary and New Zealand), do the golden circle of visits (one day) do some hiking (which is ok just not as good as say the Azores, do some whale watching (see Azores or New Zealand) do some, eat some strange meats (note "strange") and enjoy the company of a small population (see Azores).

Prices are ok, fish and seagull eggs are great.

If going to Munich during the fest, book your hotel today!