Airfares are worse than the stock market, when are you going? Right now airfare into Luxembourg and out of Paris are only $20 higher than RT Paris (from JFK).

Definitely get rid of the car before you get to Paris, driving there is maddening and parking is impossible. You can buy subway passes that will get you everywhere you want to go in Paris. You might consider dropping the car and then going into Paris by rail.

There are so many hotels to choose from in Paris it can make your head spin. A very general rule of thumb is that the further you are from the Eiffel Tower and Place de Concorde the lower the cost seems to be. On our last visit we stayed up by the Opera in a small hotel, the Florida, it was clean and sufficient but nothing fancy. I hesitate to recommend it since our visit was many years ago, but looking up in that area will save you many $$$.

I agree that you don't want the car in Paris. Use it beforehand, drop it at the airport, and take the train into town. (PACK LIGHT - 1 suitcase per person, preferably on wheels).

My sister and I went almost two years ago, and stayed at the Hotel Observetoire-Luxembourg, in the 6th arrondisement, right across from the Luxembourg gardens. It was a lovely hotel, but a bit pricey. I loved it, though. We splurged because I had just gotten out of the hospital and my sister had a small baby.

Here is the URL for a list of "charm hotels" in Paris. Some look fairly inexpensive, and you might find something there.

Have a great time - I can't wait to go back!

Here is a link that might be useful: charm hotels of Paris