I and my parents (me, mid-30s, them late 60s, first time in Asia) will have about 8~9 days in Japan this August.
As I live in Korea my plan is to ferry over to Fukuoka and then travel up toward Tokyo over that time period, before flying back from Tokyo to Seoul one -way. Given the added freedom afforded by a car I/we thought it would be good to rent and drive a car at least as far as Kyoto region then train it to Tokyo.
My questions are this:
a) Is a one-way car rental first of all a reasonable option for Western travelers who've always driven U.S. style cars & roads? Meaning, will it be worth the effort to drive between cities, such as say, Fukuoka to Hiroshima and maybe along Sea of Japan, to see the sights along the way?
b) Has anyone out there rented a car in Japan for long distances, and if so, what advice can you give? Is it easy to learn to drive on Japanese roads? How about parking -- is it difficult/expensive? How about navigation -- is it manageable? And, any rental agencies to recommend?
If you have, I'd love to be able to get in touch with you personally, through e-mail or even phone...
And on a separate note, is there some kind of huge festival in Kyoto in August that will make it difficult to reserve lodging?
Thanks for your input! :)

a) Is a one-way car rental first of all a reasonable option for Western travelers who've always driven U.S. style cars & roads?
It can be done, but in Japan there is no such thing as free one-way rental - you have to pay repositioning fee charged on per km basis back to the renting station. Fukuoka to Kyoto one-way fee would be around 32,000 yen, easily doubling your rental cost over, say, 5 days in a compact car. Rental car is mainly for exploring a specific area, say Shikoku, after travelling to and from renting station by public transport.
b) Has anyone out there rented a car in Japan for long distances, and if so, what advice can you give?
I have rented car in Japan, and on the whole it's no different from driving anywhere else (I come from UK, so driving is on the same side). Almost all rental cars are automatic and come with satellite navigation - usually in Japanese only. Most signs are self-explanatory and destinations, etc are written in English as well as Japanese. Parking is tricky in cities, less so in smaller towns and quite easy in rural areas. Needs a bit of planning in cities (e.g. checking on parking availability, cost etc but not insurmountable). Most rental companies are similar - well organised with a minimum of paperwork. You need an international driving permit, passport and credit card. Tocoo is a broker with good rates and English service - little English is spoken among rental office staff, though some provide printed bilingual guide.
c) Is there some kind of huge festival in Kyoto in August? August is a peak tourist month in Kyoto in spite of the heat, because of school holidays. There is a Daimonji fire festival on August 15th, and a lot of fireworks display throughout the month. Kyoto is a year-round destination, and particularly large groups come from Korea and China. Accommodation are heavily booked, but by avoiding weekends and not being fussed about particular areas, you should be able to find something suitable - try Japan Inn Group.
Majuang-
I don't see why people want to rent a car when visiting a country with such an efficient urban transportation system. August will be crowded with travelers, many of whom will be driving their cars. Parking lots may be full and parking is very expensive in the cities. I live in western Japan and own a car and it is such a hassle to deal with traffic and find places to park that I only use it when I have to (to get to work in the suburbs) and I prefer to ride my bicycle around town or take the train/streetcar/walk in the city.
Make reservations NOW for accommodation as the "obon" holiday week, which will be from the 11th to the 18th of August, will be peak time for domestic travel.

It really depends what kind of vacation you want to do. If you want to see the countryside, i.e. beaches, onzen, waterfalls, etc. a car would be good. But if you want see/stay in large cities (Hiroshima, Kyoto, Tokyo), the car becomes a liability and you're much better off using public transport.

I agree with Cocodrilo. Why do you feel the need to rent a car? Public transportation is great here. Tollways, driving on the left, bad drivers, insurance, the need for an international driver's license, parking (oh, God! PARKING!), kanji on road signs, etc. would be just too much for me as a first-time tourist.
I second (third?) the trains option. Just for getting to the places you mentioned trains are definately the best bet. And if you do want to go out to an onsen, etc., I'm sure you could go on some organised bus from Kyoto or Tokyo. And just because there is English on some signs, it's not really that easy to suss it out quickly when you are driving along. I think that especially from Hiroshima to Kyoto, to Tokyo you'll find that everything is very well set up to get foreigner from A to B without a car. Even from arrival in Fukuoka and getting to Hiroshima I can't imagine you having any problems. My in-laws are coming in September and I've already been thinking about these issues as we live out in the countryside where it's not so easy. And, yes, book as much as you can. Obon is ridiculously busy! You'll never believe that there can be so many human beings in one place at the same time.
As a side note, I'd recommend that you go to a temple at night during Obon to see the ceremonies. Pretty much any temple will have something going on. Have fun!

Driving in Japan is really slow. The tollway has a speed limit of 80km but most people go faster. So going long ways will kill a lot of time.
No one mentioned the toll costs either. If I remember (my co-worker was driving) the tolls one way from Nagoya to Kyoto were something like 3500 yen.
Better to get a car local then take the train.
A good place to arrange to rent a car is Club Toco Cub Tocoo
Their website is cheesy but they are a legit business.
I have not once rented a car in my 22 years in Japan, and have been all over the place on public transport- to onsens and up Mt Fuji, to Kyushu hotsprings and Hokkaido ski resorts (Hi Glenski!) and relied on trains, buses, planes, ferries the entire time. Very efficient.
My mom wanted to have me pick her up at Kansai airport when she came for a visit in March so we did and it cost us 10,000 yen (one way!) in tolls. If she didn't have artificial knees I wouldn't have done it! ;-)

Many car companies will charge you a huge amount of money to drop it off at another location. Driving on the highways is very exspensive. If you get into an accident it's YOUR fault! (trust me on this one).
You are much better off using Japans excellent trains.
I do rent a car occasionally in Japan for 2 reasons.
a) when I go shopping at Costco
b) going to the beach I like to drive to the beach it makes me fell at home sometimes. Otherwise its train, trains, trains.
On another note if you are planning on staying in rural Japan cars are not bad if you stay off the Toll highways. remember though gas is expensive and check weather or not you can drop it off in a different location!
I've rented cars on a few occasions in Japan, in order to get around islands such as Sado and Miyako, as well as in the Izu Peninsula. I would think having your own vehicle would come in handy in a place like Hokkaido as well. In the OP's case, however, I would agree with all the other posters on this thread and advise sticking with public transportation.
Basically, it's best to use a rental car not as a way to get from Point A to Point B, but as a loop - rent it in Point A, drive it around a certain area, and drop it back off at Point A again.