I rented a Hertz car last fall (October 2005), and was never asked for an IDL at the Hertz counter. I did get an IDL just in case - the $10 or so cost was worth the piece of mind.
FYI, the Hertz counter at the MAD train station (Atocha) was, without a doubt, provided me my worst rental experience! Long lines, incompetent and argumentative agents, etc. Hope you're not renting from there!