I am thinking my best option for the use of these points at a location which normally has very high rates (either big congested city or during peak season at a small market with little competition). But are there non-participating locations where I cannot redeem my points? Are there blackout dates?

I hope these aren't issues for points redemption - I looked here and did not see any such limitations mentioned:

https://www.hertz.com/rentacar/ememb...y/awardsTab.do