Michael,
Great questions. Our backpacking: we stayed at campsites, so we had a tent, air mattresses, MSR stove, cooking supplies, clothes and cosmetics.
We traveled only on Regional trains (we had budgeted $450 per person for travel within Italy, but quickly realized that the Regional trains were great for us. Only one didn't have air conditioning and we easliy got seats every time). We spent a little less than $300 per person on travel, which left money for more expensive dinners.
For the most part, we'd leave a city early in the morning (6am-8am) and take a train to our next destination. We'd immediately find our campsite, set up camp, drop off our packs and head back into town. We only had four one-night stops (out of 12 different places we visited). Each one had sites that we could see in a half-day (6 hour) visit. The only place I'd consider spending more time was Assisi; a few more hours would have been nice.
We flew in and out of Milan, so we stayed at the same campsite twice. I'd contacted them early (I had contacted them all beforehand) and asked if we could leave a small bag with my husband's suit and a dress for me. We had La Scala tickets that evening...it worked out great!
Hope this helps put somewhat of a picture on our trip. If anyone is considering a camping/backpacking trip, please contact me. I'm a huge fan (it's the way Europeans travel...we met so many fun people) and have learned alot after two summers of it.