It is only supposed to work within the U.S. but if it does waive the fee in Norway, then great. The worst that would happen is that you need to pay the underage fee at the counter. I doubt the Avis rep in Norway will even know what USAA is, so my guess is that it won't be an issue.

As for the insurance aspect, again, I think that the USAA limitations only apply to US rentals, so it won't really come into play. If you've confirmed your credit card provides coverage when renting in Norway, you should be all set.