Shalom!First, I wish you a great time in Israel- I'm sure you'll enjoy it!
Both ways you described are fine and it's all about if you want to drive in Israel or let a driver/tour guide to lead you. For my opinion to drive in Israel is not that safe, many accidents happen every day , but still many tourists rent a car in order to drive whenever they want.
However, we do have in Israel great tour guides, professionals, that will be happy to explore Israel with you.Please don't hesitate to contact me for a professional tour guide and any other general info.
Take care
Adi
Simcha in Israel - taking care for your entire trip in Israel Event Production in Israel