The LDW is required by law for all renters in Italy - it is included in your reservation. There is additional coverage which you may buy (and they may upsell you on it), but that is not necessary if you're renting using a credit card that protects you (and as stated earlier, I believe Visa does, but Amex does not in Italy - call your CC company to find out for sure).

Regarding an international DL, I had one when I rented in Italy - no one ever checked it. It was 10-20 bucks at AAA & all it does is translate your regular DL info. Still, better safe than sorry - but I would recommend checking out what the local laws are - some countries recognize other countries DL's - especially in the EU. Here's some Italy specific info:

http://www.autoeurope.com/guides/Ita...ly_driving.cfm

http://www.initaly.com/travel/lomax.htm

http://www.italylogue.com/car-rental/ (this says an int'l DL isn't required by law)

http://www.slowtrav.com/europe/car_rental.htm (this says an int'l DL is required)