Has anyone driven from Lisbon to Fatima, and on to Galicia, Spain's Santiago de Compostela ? Or ar etrains and buses better ?
We didn't quite do that trip but we picked a rental car in Salamanca, Spain. Stopped overnight in Coimbra, and Porto Portugal. Then up to Santiago. The road were great--no problems. I would think that route would be similar to the one you're proposing. We loved Santiago de Compostela!
We found driving in the countryside was no problem but driving in Lisbon is not for the faint hearted. We loved Portugal.
If you plan to pick up the car in one country and drop it off in another, be prepared for a shockingly large fee for that privilege. We wanted to take a rental car from Portugal and drop it off it in Spain, but were dissuaded by the fee they wanted. Check that carefully before making plans.
We haven't taken that trip but in 2008 we spent a month traveling by car in Spain and Portugal with no problems. The roads are very good and the traffic, away from the cities, is very light.
We've driven that area a bunch of times. No problem. Depending on what your overall plan is, the car drop off business might not be much of a problem; e.g., it's only six hours or so to drive from Madrid back to Lisbon.
Have not done the Spanish leg yet, however, have done the Lisbon-Fatima-North coast along with Evora(a hidden gem ). Surprisingly, Parking was easy to find close to the shine, however, the traffic was pretty heavy in town, but everyone didn't drive like they do in Lisbon.
We've done exactly that trip - in a rental car. You'll be fine. For us the only hairy part driving was the city of Porto - because we got off the highway to sightsee. A great place to spend a night is Ponte de Lima in Portugal, a beautiful & charming town just south of the Spanish border. Don't forget to stop at the historic Batalha Monastery on the road to Fatima. And if you want a great splurge in Santiago, stay at the superb and historic Parador de los reis Catolicos hotel right next to the cathedral.