dance,
One point of clarification.....
You'll need to have an International Driver's Permit for driving in Italy where it's compulsory. I believe that's also the case for Austria and possibly Slovenia. IDP's are used in conjunction with your home D.L. so you must have both. These are easily obtained for a small fee at any AAA / CAA office for a small fee and are valid for one year.
If you rent the car in Italy, you would also have to obtain the Highway Tax Vignette for Austria. Again, hefty fines if caught without it, and those are collected on the spot!
For driving in Italy, you'll have to be vigilant to avoid the dreaded ZTL (limited traffic) areas that exist in many cities. Each pass through one will result in hefty fines, which you may not know about until several months after you return home, when unexpected charges start to appear on your credit card. There are also speed cameras and fines for driving in bus lanes, etc. A GPS or at least a good map would be prudent.
As others have mentioned, there's usually an exorbitant charge when renting cars in one country and dropping in another. My suggestion would be to have a rental car for short term use to reach places which aren't easily accessible via public transit, and to use trains or buses as much as possible.
If you could provide more details on your Itinerary, it would be easier for the group here to suggest a strategy that will work best.