If you're looking for a small town, then Malmö is not the place you're looking for. It's Sweden's 3rd largest city with 325 000 inhabitants. So I'm still recommending Lund. Smaller and charming town with plenty of cafés and a nice cathedral if you decide that you want to do a bit of sightseeing after all.
And, planning to rent a car in Stockholm and returning it in Copenhagen is in my opinion a terrible idea. You should return it somewhere in Sweden and take the train to the airport. Not only will there be a cross border rental fee if you return it in Copenhagen, you also have the pay the rather steep (740 SEK) bridge toll if you plan to drive to the across the bridge.
And, renting the car in Stockholm is also not a gret idea. If you're going somewhere outside Vimmerby, take the train to Linköping and rent the car there. It will not only save you a bit of travel time, but also means you won't have to drive out of Stockholm. A rather boring road that also can be very congested. I'd also suggest that you add one more night in Stockholm and one less in Copenhagen. You can certainly spend 5 nights in Copenhagen without being bored, but 2 nights in Stockholm is a very short visit.