Car hire in Australia is a bit different to the US (aside from driving on the opposite side of the road!). Comprehensive insurance is included in the base rate, covering the hire car (damage/theft), damage to other cars, third party legal liability for injury to other people and damage to property. Cover amounts to several hundred thousand dollars (varies between states, as the personal injury cover is provided as part of the registration of the car and in some states, this cover is provided by a government body, in others private insurers). You cannot hire a car without it or opt out. The catch is that there is a large excess/deductible for vehicle/property damage. For the large well known car rental companies (Hertz, Avis, Budget, Thrifty, Europcar), the excess for standard sedans (i.e. not 4WD or prestige) varies from AUD2,750 with Budget, if car rented from an off airport location, through to AUD6,700 if you damage a Hertz or Thrifty car rented from SYD airport and no other car is involved (e.g. if you hit a kangaroo). 4WD and prestige vehicles (Mercs, Audis, Lexus, Minis) generally have a base excess of AUD5,500, not including airport surcharge (up to 22% from the likes of SYD). An additional excess of AUD 2,200, not including airport surcharge, applies if no other vehicle involved (Called SVA excess). Total excess if a prestige car or 4WD hired from airport and damaged with no other car involved would be approx. AUD9,400! It costs AUD25-50 per day to reduce the excess to several hundred dollars. Note that the cheapest excess reduction with Hertz and Thrifty does not remove SVA - you need to purchase the higher level of excess reduction. Hertz in Tasmania also has a non waivable excess of AUD9,900 for damage on unsealed roads. Prestige cars and 4WD's rented from anywhere and all cars rented from remote locations (the definition of remote location is not the same as yours and mine - it includes large cities such as Darwin!) have limited km's (200 per day for prestige or 4WD rented from large locations and 100 per day for all vehicles rented from remote locations, incl. Darwin). Driving on unsealed roads (which is very common in Australia) is a minefield - Hertz does not provide cover, but not prohibit it, Europcar and Thrifty prohibit it (there are some exceptions), Avis and Budget allow it with full cover at no extra cost, provided the roads are marked on a map and are well maintained. One final thing to note: most US issued credit cards which provide rental car cover (LDW/CDW) specifically exclude cover in Australia. Not sure what you mean by standard transmission? If you mean manual, most cars in Australia are auto. The only hire cars which will be manual will be the cheapest economy cars - usually 3 door Hyundai Getz, Kia Rios or Holden Barinas (Chev Aveo). Hertz also have manual compact hatches (often Toyota Corollas).

There are many natural things/places worth visiting, most of which require a lot of driving or flying, but there are a couple near where you're staying in Sydney, which are only a reasonable drive or you can even catch the train! First is the Blue Mountains, approx. 1.5 hours drive west. I recommend the National Pass walk - one of my favourites. See nationalpass.com.au. Another place even even closer is the Royal National Park, just south of Sydney (You can see the Harbour from it). I haven't been there, but it's high on my list. You can even do a 3 day guided walk with restaurant quality dinners and proper beds in tents - it's expensive but looks fantastic! See thecoasttrack.com.au

Further afield, places I've been to, or will be visiting shortly (or have on my list), off the top of my head, are:

Uluru, NT
I flew into ASP New Years day a couple of years ago, for a few days visit. If you ask me, summer is the best time to visit - yes, it's hot (35-40C during the day and 22-25C during the night), but it's low season, so tourist numbers are not horrendous (there were still plenty of tourists), it's cheaper (but still expensive) and you get to see the desert at its best. Don't forget to visit the Kings Canyon and do the rim walk - early in the morning so you're at the top at sunrise is best. I actually preferred Kings Canyon to Uluru. You can either do a tour or hire a car. You can fly direct to AYQ.

Litchfield, Katherine Gorge & Kakadu, NT
I'm visiting there in two weeks for 4 days (mates I'm travelling can't take anymore time off work) - looking forward to it! Weather will be hit too. I'd love to visit in the wet season too, but's difficult as everything shuts down.

Lake Eyre, SA
I was there between Christmas and New Year last year (Flew to ADL, hired a 4WD and drove up with a mate over a week, via Clare Valley and Flinders Ranges - drove 2,500 km in total). It's one of the largest inland lakes in the world which only has water in it every few years and has only filled a few times in the last century. It has had a fair amount of water for the last 2 years. Unfortunately didn't get to see the water (much of it had evaporated) - we were told it was 500 metres from the shore, so we started walking out in thongs, but only made it about 200 metres before we had to turn back, as we were sinking 6 inches through the salt crust (up to a few inches tick!) into the mud, which was hot (about 60C!). As far as you could see was the white salt crust! Ambient air temp was about 40C and 50C on the lake's salt surface! We were the only ones there. An Austrian tourist died there a few years trying to walk 60km back to the nearest town after her and her partner got heir 4WD bogged. Standing on salt crust, I took my sunglasses off and it was blinding - without having experienced it, I suspect it is similar to what snow blindness would be like. It was a surreal and awesome experience that I won't forget. You can also fly over the lake which isn't cheap.

Flinders Ranges, SA
Spent 3 days on the way back from Lake Eyre doing bushwalks - again, very hot but well worth a visit. It's about 4 hours drive north of Adelaide. You don't need a 4WD for this.

Kangaroo Island, SA
Large island off the coast of SA - you can fly there or catch the ferry across from Cape Jervis, about 1.5 hours drive south of ADL. Ferry ride itself is expensive, especially if taking a car. Note that it can be very rough - I went in November a couple of years ago for 4 days and the ferry over was very rough but smooth as glass on the way back! Lots of great beaches, national parks (including caves) and a few wineries. A few things to note:

Most of the roads on the island are dirt - there are only two sealed roads. You can access many of the attractions on the sealed roads. The island is deceptively large.

Car hire is tricky - you can hire cars on the island from Hertz and Budget, but they can't be taken off the island. No insurance cover at night. Most car hire companies don't allow you to take cars from the mainland to KI (or most other island for that matter). There are a couple of exceptions - Europcar and Thrifty will if you advise them when you collect the car. they may charge you extra and impose additional conditions though. We hired a car from ADL airport Thrifty and they did not charge any extra or impose any additional conditions (despite normally prohibiting driving on dirt roads). I'm not sure whether I misunderstood and we weren't supposed to drive on dirt roads (it was a couple of years ago now).

Grampians, Vic
One of my favourite places! A mountain range in a National Park about 3 hours drive west of Melbourne with some spectacular walks, including the Pinnacle and Hollow Mountain. At the southern end of the NP, there is also one of the best restaurants in Victoria, the Royal Mail at Dunkeld. It has many options for accommodation, including backpackers, motels, self contained houses, b&b's and luxury retreats. Hopefully all the roads and all walks will be open by this summer - they were extensively damaged in January by severe storms which caused major land slides, resulting in many walks being closed [some of which are still closed as far as I understand] and many roads being closed, including the main road that runs north-south from Dunkeld to Halls Gap [which was still closed when I was there a couple of months ago]. Don't let this stop you though, there is still plenty to see and do!

Wilsons Prom, Vic
Another of my favourite places - it's a National Park about 4 hours drive south-east of Melbourne, which has many tent sites and cabins in the heart of the park. These will be difficult to book when you'll be here, as it's peak summer school holidays. Contains some of the best beaches in Vic and great walks. It's the southern most tip of Mainland Australia.

Note that there are no fees to visit National Parks in Victoria - they were abolished a couple of years ago.

Cradle Mountain, Tas
Spectacular mountain in Tas. Best in winter, when it snows (not for skiing, just very picturesque) but still worth visiting in Summer.

Lamington National Park, Qld
Rainforest two hours from Brisbane or the Gold Coast, with walks, accomm and a winery. Can't comment much further - visiting in Nov. Was supposed to have visited in March, but flights were cancelled. It could be quite humid when you'll be here.

This is by no means an exhaustive list. You can even visit close places such as the Dandenong Ranges just outside Melbourne, or the Adelaide Hills just outside Adelaide. The downside to these is that are populated.

Why no WA? I haven't been there yet!

If you like wine, there are plenty of wine regions to visit.

To answer your question regarding accommodation, we do have many B&B's, but they tend to pitch towards couples at the upper end of the price scale (AUD200 per night would about average, even in remote places), unlike the UK, where they tend to be cheap (I spent a week travelling around the UK about 10 years ago and stayed in B&B's every night for 20GBP!). This is a generalisation - there are exceptions. For cheap basic accommodation, we stay in pubs in small country towns - usually about AUD60-100 per night for 1-2 people.

I think that's enough of my ramblings for now! Let me know if you'd like any more suggestions/info.