I have driven all over Europe (yes, paying dropoff fees of about $300-$500). I have driven to the Interlaken area (which is one of my favorite places on the planet. Not many more beautiful than this area). We drove to and stayed in Grindelwald. We took gondola, cog wheel trains, trams all over the place to get to Wengen, Lauterbrunner, Klein Scheidegg, etc. etc. We also drove to Venice. Parked our car in the huge parking garage there and took a water taxi to our hotel.

Personally, I love driving through Europe. I can stop whenever I like, see towns along the way, and make my own schedule. For me, that's worth the dropoff fee!

The Dolomites is another area along the way that may be of interest. We stayed in Ortisei.

Salzburg is also definitely worth the stop!

Lots to squeeze in, but a nice adventure!

Driving yes can be exciting - especially in Alps if you take roads up and over instead of tunnels under and you can drive in cities that allow it without real problems - cities OP is talking about anyway. But on limited time and going only city to city trains are best and also cost of renting car in one country and returning in another can cost a ton. Driving around rural Bavaria can be a blast for some tedious for others. so no right and wrong take on efficacy of driving but in short time and doing mainly cities take the train or plane.

Munich to Venice ( or vice versa ) is a nice, all day train ride - don’t think about doing it overnight.

Germany is very easy to get around with public transportation. Most likely everywhere you want to go on this, the first trip, is served by trains and buses

Salzburg - salt mine at Hallein, ice cave at Werfen- both highly recommended. There is also a summer toboggan near the salt mine

Venice - do take a gondola ride

Lucerne - Mt. Pilatus