• should I be doing the jungfrau excersion or take the glaciar express (is that the the one you referred as Loetschberg Express?)
The Jungfrau is expensive, even with a Swiss Travel Pass. If you do go, only if the weather is clear, and likely to stay that way for many hours.
The Glacier Express travel east to west, and you need trains that go north and south to get to Italy.
The Loetschberg Express is the old route to get from Interlaken to Italy. It goes over several U-turns to climb the mountain and then a medium size tunnel (14 ½ km), then more twists and turns descending to the valley. About 9 years ago, a new tunnel was opened (34 ½ km) completely under the mountain, speeding things up but eliminating the scenery.
• should I travel to black forest as well
No, the Black Forest is minor compared to the Alps. Not worth a detour.
• should I take 1- 2 days in austria as it seems its less expensive? if yes then what all should I do there?
Possibly. It is a decision you will need to make, but off-hand, I can’t think of anything that will top Swiss scenery.
• suppose I spend 7 nights/8 days in swiss, what all journeys should be suggested so that I can try to calculate the difference between half fare and a travel pass.
I’ll talk about that in another post. It is a long subject.
• are there any disadvantages of taking the rental car? from what all I could find till now it seems with the rental car I would be able to get houses which are less expensive but at off train/bus routes and still save travel time.
The only disadvantage is cars cannot reach some remote mountain areas that lifts and mountain railways can reach. So you will need to park the car and buy tickets and travel that way. But it is a viable option. Drop the car at Interlaken and proceed to Italy by train.
• how to travel in italy? rental car in venice or Domodossolo or should I get a travel pass there too?
In Italy, use trains. Fast (much faster than cars) frequent service between Milan, Venice, Florence, and Rome. And they are relatively inexpensive, especially if bought in advance like airline tickets. No pass is as good as buying advance tickets on-line.
You have your start and end points. Now decide your locations, number of nights and book lodging. Then you can connect them with trains or car. By national mandate, every station in Switzerland has at least one train per hour in both directions (except, of course, the middle of the night). Italy trains between major cities run at least once per hour.
