So, here's the plan as it stands:

Flying from Denmark in mid August. Will spend a few days in the Altea area and eventually return to Madrid via train. (still need recommendations on places to stay in Altea. Started a topic but no response in lodgings)

I'd like to rent a car for a few days. Would it be better to fly into Alicante or perhaps Valencia? Any ideas on this trip would be great.

I´ve been to Altea before but just a day trip . I was staying with friends in their birth place of La Nucia . Altea is very nice but please please please avoid nearby Benidorm . It´s horrible ! You can see the city from Altea , across the water .
From Altea it would be easy to get to Guadalest ..in the mountains .. It´s a world heritage site so you can expect lots of tourists but it is worth seeing and then take the short drive to Benimantell ... Carretera Alcoi 27 ... A restaurant called L'Obrer ... A beautiful small mountain village and the restaurant is , by far , the best I´ve been into in 6 years of living in Spain . 30-35 Euros for the menu but it´s worth it !! Best to book in advance . Tel no. is ( 00 34 ) 965885088 .
We drove from Madrid , but i´m assuming that Alicante would be the best option for you ( concerning the airport ) .

One comment on L'Obrer that I just found ( In Spanish ) : He ido a muchos restaurantes, soy cocinero y cuando fui al l'Obrer me quedé sorprendido de la calidad de su comida (muy elaborada) y del magnifico servicio (a mi me atendió una muchacha de 17 años que es el toque de perfección del restaurante con simpatía y su entrega). Y como soy de los que piensa que para una buena velada no se puede acabar sin un buen postre, he de reconocer que la tarta de queso es la mejor que he probado en toda mi vida. Así que yo, personalmente, recomiendo este restaurante.

We were served by the owner's son who is studying at university but works part time at the restaurant . He was friendly , professional and 100 % efficient .

but please please please avoid nearby Benidorm . It´s horrible ! ..jejejeje..is true, that is Sodoma & Gomorra
but Altea is a beautiful town and very near Benidorm.I recommended

if you rent a car superb ,best way to travel, get the triangle Barcelona,Valencia and Madrid. I have been to all three many times and love it, specially since lived in Madrid and had aunt in Saler just south of Valencia, went there many times for free lodging hehehehe.

I do agree Benidorm is horrible is a mild word ::)

my five cents worth for the day ;cheers

If you get the chance, watch the (extremely funny) ITV show "Benidorm" you will see just how utterly horrible the place is!!!

Agree though that Altea is lovely

JanD .. I have that DVD here in Madrid and watched it with my 2 friends .. One from País Vasco and the other from near Alicante . The guy from Alicante "mis spent " his youth in Benidorm and confirmed , as hilarious as the series is , that it´s pretty much true ! More like a documentary than a comedy series. I love the characters : the posh couple , the Spanish barman , the gay couple , the swingers , the wheelchair bound - vodka drinking grandmother and her awful family . I totally love it !

Benidorm ( the place) makes me ashamed to be British....I would assume non package holiday Germans would feel the same !!!

When they first showed Benidorm ( comedy) in UK they also showed a documentary series based around the staff and guests at a Benidorm hotel (may be the one used in the comedy). The documentary seemed so far fetched, that at first we thought it was a P*** take of the comedy series.