Try the aggregators Kemwell and Autoeurope as well as looking directly at the websites of Hertz, Avis, Europcar and Sixt.
All rentals direct from the rental companies will automatically include CDW but with a deductible of at least 800Euro. You can reduce the deductible to zero by paying a hefty premium.
he big advantage of Kemwell and Autoeurope is that their rates in Italy always (at least in my experience) have a zero dollar deductible!
Regarding car size go with the smallest feasible for you AND your luggage. Boot space can be very tight in some small models but a small car will be much easier to park, drive on mountain rds etc.
Do not hire a gps unless you like being screwed over. If you have a gps at home get the maps you need. If you don't, get a product like sygic which is a gps for a smartphone and requires no data connection once you download the maps at home. I swear by it.
You can take Italian hire cars into wetern European countries. There are restrictions on Eastern Europe that vary between rental companies and even the type of car you have. It is easy to find this information on the rental company websites