Hertz appears to be A/B testing the idea of charging customers for cancels/no-shows on Pay Later rates. I ran a bunch of tests and it comes up sporadically. They are probably trying to gauge the reaction of customers to the concept.
Interestingly, the cancel penalties are exactly the same for Pay Now vs. Pay Later, so if you are being forced into it, Pay Now is often the better deal. That said, as the OP pointed out, you can just open a new browser session to get around it (for now), but you can also go and hit the Select Another Vehicle button as well and that seems to stop it from forcing the option on you. They probably figure that if you don't bite at first you're probably not going to, so better to back off than to lose the biz. I'm sure they're tracking exactly how many people click the Continue button vs. Select Another, as well as how many people eventually complete a reservation vs. drop out of the booking funnel.
Time will tell whether this is something that the rental industry can make stick to not. Despite the obvious business advantages of forcing cancellation penalties on their customers, they need to tread lightly, because if one of the big three goes down this road, but the other two don't follow ("caught with their pants down"), the leader could end up in a lonely place and see their bookings drop dramatically. That's one of the reasons you've seen hesitance in the past in this area.