Just wanted to post my recent dealings with them...
I confirmed that my Penfed Amex covers Israel(double check for yourself) and had no problem at all getting Avis to allow me to decline collison. Since the Penfed has no annual fee anymore I'm planning on keeping it for this purpose, they also have no Forex fee so it's doubly good.
I picked up the car at terminal 3, as presidents club, which is nice, but there is no one to go over the car with you, they just hand you a paper showing prior damage and you go to the car yourself. I did not do any damage and did not think anyone hit me either, but when I returned the car they showed me a scratched and dented spot not shown on their diagram. I insisted it was there before and they discussed for a while among themselves. Finally the manager came out, looked at the paper and said that the paper does state there was a scratch in the place where they found it so even though it doesn't say there was a dent, we can assume it was dented there too. It's a little meshuga.
Anyway the lesson is that you have to go over every little thing before especially if you pick up at T3. I don't think I would use Avis anymore but i find them to be cheapest and they have stations all over Israel in case something goes wrong. I guess they are cheap because they make it back on the alleged damage!