To close this out.

I spoke to the pass folks. When you enter the rental plate their system will replace the existing hertz arrangement. Hertz doesnt deactivate anything.

They said it is instant (the replacement of your payment info in place of hertz info, once you enter the plate number), you can do it via web or phone. I think it is 1.75 to set up online, 3.25 via phone

As stated above, if you will be driving in and out of the city, the daily fee might not be bad deal. Odd that 4x4 or awd is only 14.30 a day and 2wd is 16.50, at least NSW