My info may be out of date here, but when I rented a car in Australia in 2006, the "excess" charge was a substantial amount posted to your credit card, which was then refunded upon the (safe) return of the car. If you didn't want to have this huge charge sitting on your credit card balance for that period of time, you had the option to pay an additional per-day charge, which--as you note--was quite expensive. I opted to allow the excess to be charged, since I have a high credit limit and didn't really care that I had a $5000 charge taking up space in it.

I also use my Amex for car rentals, for the insurance coverage.