Advice on this 2-week itinerary?

Some nice destinations but also some troubles. (In my comments I hope it's not too obvious that I wear a "Challenge Auhority" t-shirt when it comes to following Rick Steves' tips for travel planning...)

BERLIN: Awesome city in many respects. Don't shortchange yourselves. Either ignore it, or allow yourselves at least 3 full days of sightseeing (which probably means 4 nights since Day 1 is typically a mess due to flight times, transfers, flight fatigue, etc.)

LEIPZIG: Not a city I have seen much of except around the rail station. Kudos for selecting it for personal reasons.

NUREMBERG: Awesome city. Fun museums, great beer pubs, attractive pedestrianized old town with old wall remnants and castle, Franconian culture, underground tours. Again, either ignore it or stay at least 2 nights. Better yet, stay there for 2-3 more nights for doing day trips.

BAMBERG: It's on the main railway between Leipzig and Nuremberg. Why make a separate trip there? Just plan to stop there enroute to N'berg for a full day's looking around. Put your bags in a locker at the station while you do that. Also a lovely place.

Driving the Romantic Road: WAY overrated... not very scenic. Dinkelsbühl is a nice town to visit. Rothenburg too. But you can reach Rothenburg easily by train from Nuremberg (without passing through Würzburg, btw) by train. A round-trip from Nuremberg to R'burg for two costs only €22! And if you skip Dinkelsbühl, well, you will easily find nice places that Rick totally overlooks or ignores in his materials... There's no reason for YOU to miss out on...

Iphofen - leaf through the photos here. A wine town with old-town walls, towers, half-timbered buildings with lots of artists. Vinothek for wine tasting. Riemenschneider works in the handosme Stadtpfarrkirche. Nice places to eat. English brochure here. Take a half-day trip there from Nuremberg (45 minutes by direct train.)

Bad Windsheim's Open-Air Freilandmuseum - Really interesting collection of buildings from the local area which were disassembled and reconstructed for preservation purposes on this site. It's really like traveling back in time there. Brewery and restaurants on site. No problem spending half a day here. And Bad Windsheim is attractive and interesting too. The Döbler Brewery there is nice. Tripadvisor information on the museum here. Bad Windsheim is 53 minutes from Nuremberg by train.

Würzburg - Not clear if you really wanted to see it or not, but you were planning to stop by it seems, and it does have a couple of great draws, including the RESIDENZ PALACE, a UNESCO WORLD HERITAGE site. You could easily combine a visit there with your visit to IPHOFEN in a single day if your sightseeing goals in Würzburg are modest. Iphofen, Würzburg, and Nuremberg are all on the exact same train line.

Map of Nuremberg area train lines (Würzburg not shown but it's just beyond Dettelbach to the northwest)

So with Berlin (4 nights) Leipzig (3 nights) and Nuremberg (4 nights) you have 2-3 nights left for whatever else matters to you. I'm not a huge fan of Munich. IMO Dachau is just depressing - I learned nothing new/important there. Salzburg is great. A night there is better than a day trip. Neuschwanstein is just tourist bait.

Those are all great suggestions! My only hesitation is that a lot of these small towns (according to Rick Steves but other guidebooks too) are best to visit at night, after others have gone home. Wouldn't I miss out on the fun if I were only doing day trips to Bamberg, Rothenburg, etc?

I see what you mean about Neuschwanstein, but I want to be in that area anyway to see the Bavarian Alps—possibly the Zugspitze or Tegelberg, luge rides, gorge hikes like Partnachklamm, etc.), and it seems like having a car is really useful for that purpose.

I’d spend a night or 2 on the Romantic Road rather than drive it in just a day.

Some good and some not recommended.

Not sure why you want to go to Leipzig. Have you researched what there is worth seeing there? I suggest purchasing a guidebook and use the internet to research the places that you plan to visit. I suggest dropping Leipzig. You could spend another day in Berlin and do the Romantic Road.

Wurzburg is worth a visit, then down the Romantic Road, visit the medieval walled cities.
https://www.romanticroadgermany.com
It's not too hard to see the reason for the popularity - despite the modern roots of the idea, the tour combines the historic cities of Würzburg and Augsburg with the three medieval walled towns of Rothenburg ob der Tauber, Dinkelsbühl and Nördlingen, and then finishes off with the tourist highlights of Neuschwanstein Castle and the Alps. Don't miss any of these places.

Augsburg is worth a day, stop and see the Rathaus and go to the Fugeriei (a three hundred and fifty year old mini city for the poor).

While in the Fussen/Garmisch area, consider taking the cog train or cable car up to the top of the Zugspitze.

My only hesitation is that a lot of these small towns (according to
Rick Steves but other guidebooks too) are best to visit at night,
after others have gone home.

Like everyone else, I've heard Rick's words in this regard - about Rothenburg specifically - but as you and those other guidebooks say, the same applies to "a lot of these small towns." Not sure which "these" you mean, but I think you're right that at night, the old-world streets in most small towns take on a special atmospheric vibe. Like in Cochem, one of the Mosel River towns...

https://farm5.staticflickr.com/4565/38662298236_f50bae3391_k.jpg

or in Bernkastel (Mosel River) - https://img0.oastatic.com/img2/36971118/max/historischer-marktplatz-in-bernkaste.jpg

or in Nuremberg (not a small town - but the old town zone sure feels like it!)

or in Bamberg

or in Erfurt, a town your train will pass through or stop in on your way to Bamberg.

Most small old-world towns like this are nice for a relaxed stroll, one of the reasons I like visiting small towns. As regards Rothenburg, that atmosphere is part of the reason people take and enjoy the Nightwatchman Tour, which Rick also recommends. Unfortunately in Rothenburg during high tourist season, the streets during mid-day hours are uncomfortably packed with daytripping tourists. If you spend a full day in town, that's what you'll likely be facing. But fortunately, Rothenburg is quite small - you can see it in a couple of hours, relax over dinner between 5-7 or so, and see it again in the evening on one of those street strolls, either with or without the Nightwatchman. Also, fortunately, most of the visitor crowd has petered out by mid-afternoon. So it's feasible to arrive in Rothenburg at around 15:00 for a stay of 5-7 hours from Nuremberg, or Würzburg, or some other nearby base town. Sightsee + dinner + stroll. Then hop on a train - maybe as late as 22:00, or even 23:00, if you like - back to your base town. For early-to-bed people, this might not work. But others probably don't gain much by sleeping in Rothenburg (you're asleep, right?) or waking up there. Personally, I'd just as soon do it this way and avoid the change of hotel, check-in, unpack, pack-up, check-out routine. But then, I'm the kind who always leaves his favorite shirt or his toothbrush behind. I'm sure others are better organized travelers.

It's possible to hang out in Würzburg 'til late and get back to Nuremberg as well. Würzburg is beautiful at night too.

Just one person's advice.

I would not skip Munich .... specialy not in the summer :-)

https://www.munich.travel/en/topics/urban-districts/summer-in-munich

"I want to be in that area anyway to see the Bavarian Alps..."

Great choice. You should go. Try to fit in 2 nights if possible. There is a lot to see and do. The Partnach Gorge is great. The Gasthof Fraundorfer offers a fun Bavarian Evening in G-P. Mittenwald, just a short distance away - if you truly want the perfect Bavarian village - M'wald will not disappoint. You'll also find the Leutasch Gorge and the Karwendelbahn (lift) there. See page below for M'wald info.

https://hastingshouse.typepad.com/hastings_house_us/2007/04/mittenwald_germ.html

For Munich > Garmisch, Mittenwald, the Zugspitze, there's no need for a car. The trains from Munich are direct to G-P and Mittenwald unless there's a repair project underway (I think that's what's happening now.)

For the Partnach Gorge, the local bus (free with your G-P Guest card, also free if you stay in G-P) gets you to the Ski-Stadion stop for that.

The train ride from G-P into Austria in the direction of Reutte is very scenic. If you were to find time for Füssen also, from G-P you'd take this route and then a shuttle bus into Füssen. This map shows the train routes into and out of G-P (black/white line) including the routes to the Zugspitze and Mittenwald.

We have stayed at the Gasthof Fraundorfer, its great. I highly recommend it.

If there is a keen interest in Bach, Leipzig is worth a visit. It also has other heritage sites, such as the protest against GDR, Battle of Nations monument.

There is a BBC radio programme about foot steps of Bach, which are scattered around Central/Northern Germany.
https://www.theguardian.com/travel/2017/dec/18/js-bach-baltic-walking-germany-history-lubeck-mountains

Halle, which is right next to Leipzig, seems to have some music related heritage sites, such as the House of Haendel.
https://haendelhaus.de/en#mm-close

I would do everything by train, skip Neushwenstein but I loved Fussen, spend 3 nights in Salzburg and the last 2 in Munich.
Also, if you leave on a Saturday and come home on Saturday or Sunday, you could have 15 or 16 days.