Is it worth Renting a car in both islands? I was thinking about only renting for the south island.

Renting a car is quite expensive in NZ, but it is a good way to get around. Tour buses will not take you to the good places you will hear from locals, and you can also stop places at your leisure and have a look around/talk to others if thats your thing. You will find that you cop a lot of abuse on the road though from other NZers. We have have had a lot of locals die due to tourists driving on the wrong side of the road and not driving to the conditions, so as long as you are aware of others around you (and pull over if you are going too slow to let others pass!) you will be ok. Just be aware that the sentiment towards rental cars is not positive though.

Are there any experiences that you would recommend? Especially ones that are CAN'T MISS opportunities while i am in the area?

It depends what you are into! if you like thrills or hiking or eating or looking. There is a lot to do everywhere you go, and there are always plenty of things to see. I personally love beaches, so if I find a decent beach I am happy, and there is plenty in NZ. Places like Golden Bay are my favourite place. What are you into?

Third, with it being summer, should i take mostly lighter clothes and then one or two sets of layers in case I do any of the slightly larger climbs? I will be hiking a decent amount but I don't have those booked out yet, everywhere says its usually 70-80 degrees around this time of year and a pretty moderate climate.

I think this also depends what you are used to in terms of heat. I personally sweat my ass off everyday in this heat, but it might be mild to you. I would suggest mainly light clothing, but bring a change of warmer stuff too. I havent felt the cold a lot but we have been having some crazy weather lately.

What is your itinerary? This could help get more specific advice?