Are you planning on taking the Shinkansen between Aomori and Hachinohe, or the regular train?
Just a little background - I've been to all the big Tohoku festivals - Morioka Sansa (drum festival), Aomori Nebuta, Hirosaki Neputa, Akita Kanto Matsuri (lantern festival), Yamagata Hanagasa Matsuri (flower festival), and Tanabata Matsuri in Sendai. I was able to see all these festivals over the course of 8 days a few years ago. The Nebuta/Neputa festivals were at the top of my list for years, but I could never go, because I always forgot to book my hotels far enough in advance (i.e. 6 months). Aomori is a small place with few hotels - that means during the festival period when thousands descend on the city, there are no hotels available there, or in any towns within reasonable commuting distance. I did book with Toyoko Inn as they allow you to book 6 months in advance (i.e. March) if you are a member (free, online application). So if you can stay in Aomori, I highly recommend it, so you don't waste time and money going back and forth. The other thing to consider is that thousands of people will also be using the trains (think packed-in Tokyo rush hour type crowds) - especially for the last few trains of the night. If you are going to be using the trains, make sure you know the train times and buy your return tickets in advance (get them once you arrive in Aomori) to avoid the crowds at the machines, give yourself at least double the time you would need to get to the station (again, to navigate the crowds), and get there early - 15-30 minutes is good if you actually want to get on the train and maybe get a seat. If you arrive just before the train leaves you'll a)be lucky to get on and b)will probably be smushed against the door for a good part of the trip. Please note - this is (in my experience) just for the regular trains, not the Shinkansen. If taking the Shinkansen, make sure you have a reserved seat, that would ensure you get one!
There will be festivals all over Japan in August (mostly summer/fireworks festivals) which will mean crowds everywhere. You'll have to be careful over the O-Bon period (this year between Aug 10-18, if you include the weekends on either end) - trains will be busy (but still possible to get a ticket) but hotels/hostels will be booked solid, so the sooner you can figure out your schedule, the better, so you can book your accommodation in advance. Travelling during this time isn't so bad, if you plan in advance - it's really the only way to make sure you have decent, reasonably-priced accommodation during your stay.
As for O-Bon festivals, one of the most famous is the Awa Odori Festival in Tokushima (on Shikoku). I've been to it twice, and it's a great festival to see and experience, but, like Aomori, the city itself cannot handle all the tourists that come to see it (and that includes neighbouring cities like Takamatsu, where I used to live), so you need to book your hotels ASAP (i.e. March, if we go by the 6-month rule) - if you wait until April they will be completely full up. Once you are in Shikoku, there are plenty of interesting things to see and do while there (search this forum, both Giora and I have written about it quite a few times) - I think it would provide an interesting, more off-the-beaten-track experience to the standard Tokyo-Kyoto-Hiroshima tour that most people do. You have the extra time to do it, so it's one possibility, if you are interested.
