Exploring the Austrian alps by car next month. Tips, suggestions, and expected costs?

have you considered including the berchtesgaden area, it is in Germany,( but only 'just') we particularly enjoyed the scenery, villages etc and attractions in the surrounding area. and not too far from Munich.
your comment about Switz, is a valid one. IMO.

while we always book before hand, there are plenty of guesthouse/pension options at very reasonable prices.

hope this helps.

I agree with the Berchtesgaden area. In Austria, I'd suggest both the Zillertal and the Oetztal for high, snow capped, alpine scenery. There are scenic drives in each area. The Rossfeld in Berchtesgaden, the Zillertaler Hohenstrasse and the Glacier Road in the Oetztal.

Expected costs -

In Austria all drivers on the rental contract (even one from Germany) must have an IDP. Exceptions are persons using an EU driving license. $10 to $20 at AAA/CAA.

In Austria if you enter on an Autobahn, leave on an Autobahn, or drive for any distance on an Autobahn or expressway, the car MUST display a toll Vignette stuck to the window. It is unlikely that a car hired in Germany will have one. Available prior to crossing the border at service areas and petrol stations. €8 for 8 days or so. We just had a post here from a person who had to pay a huge fine for not having one, and he was not happy. A word to the wise is sufficient.

Here is a list of some Gasthauses in Tirol (its in German but you might be able to read it and it has links to all the websites).http://blogtirol.at/2014/09/meine-33-liebsten-gasthaeuser-in-tirol-die-besten-restaurants/

Tirol is not terribly expensive if you stay outside of St Anton, Kitzbuhel, Sölden, etc. Most of the small villages are pretty similar, but the level of spoken standard German (instead of dialect) varies dramatically.

Leutasch is near touristy Seefeld, but not touristy at all and is off the beaten path, Schnaritz and Mittenwald (DE) are nearby. People really like Hall in Tirol on this forum but it's not my favorite. Glungezer in Tulfes is a pretty cool hiking area (and small ski resort) near Innsbruck and Hall and has zero tourists. Many of my Austrian friends really like the Zillertal area, but I don't have any experience there. Stubaital is nice. Öztal is pretty remote is you stay out of Sölden. The Arlberg (St. Anton area) is absolutely gorgeous but it is more expensive and has tons of tourists (although I skied there in April and no one was there).

I would just pick one or two of the valleys and explore 1-2 days in each. The mountains west of Jenbach are more impressive, unless you go to Großglockner area. You could also go to Sterzing or Brixen areas in Südtirol.

If you visit Salzburg. Go to "Hangar 7", its a free museum from Red Bull where a lot of cool planes, cars and helicopters are shown. Doesn't take long and is a neat opportunity to see a f1 car up close ;)

Also Zell am See is a pretty nice place to visit. A beautiful lake between the mountains and a ski-resort in winter.

One thing I noticed... rent your car as you leave Munich, not before your arrive. Parking and driving in the city is very expensive and inconvenient. Only a few of the most pricey hotels can guarantee you a parking space, and even there, you will have to pay extra.