Yes, I have rented a car in Italy. In fact, it was in La Spezia and we drove to Piemonte via Lucca and Florence. Ok, I know that makes no sense at all but that is what we did. Even better when I went to get the car they only thing they had left was a Mercedes Station Wagon. At first, I was freaked, but it was some kind of spacious and extremely comfortable. The major roads in Italy in the north are no problems, and even in the country roads of Piemonte were very good.

I think used Hertz on that trip. Picked up in La Spezia and dropped off at Milan Airport.

Traveling country to country within the EU is no big deal. The car rental place just needs to know. There is a sticker on the windshield that identifies where you can go. Or you can catch the train to Milan and rent there, thus avoiding your concern.

In Piemonte, the BB we stayed outside of Alba was called Villa Favorita - Just a great location! I was sadden to see when I got the link for you that they had posted Roberta, the owner, had passed last year. She also gave cooking lessons, and was an amazing lady and gracious host. It looks like the Villa is being well cared for by the pictures on their page. The villa is part of a farm that overlooks the city of Alba. You know the HOME OF NUTELLA.

I have never been, but everyone I know who has been has always raved about Torino (Turin). It may be a little larger city than what you were looking for, but a lot to see and do.

I will add that in Piemonte you do want a car. All the small villages are separated by miles of vineyards and no real public transportation. But oh so beautiful!