AAA is on the level, I was told the same thing at a AAA office last month. They said that it's becoming more of a problem cashing traveler's checks in foreign countries because of counterfeit issues, and that fewer places are taking them. They recommended the AAA pre-paid VISA card. We got that and had no trouble at all, you just go to an ATM and withdraw the amount of money you want and it's in the currency of the country you're in. The withdrawal fee was a flat $2/transaction so we just made fewer larger withdrawals rather than many small withdrawals. If there's any balance on the card when you get home, just go to the AAA office and they'll refund your balance for no charge.

You can also load more funds onto the card. My wife was traveling with one and called me a few times to put more money on her card.