Taking the train from Munich to Bolzano in April. If I purchase the Italy only railpass, where should I purchase a ticket to in Munich? All the way to Bolzano or the first stop in Italy?
Basically yes, just purchase to Balzano, unless you are taking a circuitous route through Italy to get to Balzano. According to Bahn.De there are a couple stops in Italy prior to Balzano, but less than an hour before Balzano...so to get off the train, validate the pass, get probably another train, just does not make sense.
As Ron from Rome explained in his post on your AMICA fare thread, a railpass for Italy alone is usually not cost effective. Besides, if you book well in advance (up to 90 days allowed) at the German Rail site, www.bahn.de, you can get a discount fare as low as €43 for Muenchen-Bolzano.