Travel in Lucerne and Interlaken/ Jungfrau

Along with my wife, I would be visiting Switzerland for about 5 days in the first week of September. As this is part of a Europe itinerary, we have already purchased the Eurail Global Pass for our entire trip.
The Swiss leg of our plan is as follows:
Day 1: Lucerne (arriving from Innsbruck via Zurich), local sights
Day 2: Engelberg and Mt Titlis and return to Lucerne for the night
Day 3: Lucerne -> Interlaken with stay at a lodge in Iseltwald
Day 4: Jungfrau + Gimmelwald and return to Interlaken
Day 5: Local Interlaken sights, with Golden Pass train to Montreux and further to Geneva for night stay.
Day 6 morning: Leave Geneva for Paris.

My questions are:
1. Is the itinerary fine or do I need to modify it?
2. We have heard that the Jungfrau trip is on the expensive side, despite the 25% discount accruing from the Eurail Pass (right?). Is there any way we can reduce our costs on this (by buying some other card or something) ?
3. For local get-around in Lucerne & Interlaken, I believe our Eurail Pass is not valid. I have however heard that the hotels/hostels provide a tourist travel card which enables free unlimited travel. Is this true? Is it available at all hotels/hostels or should i find out from our hotel/ hostel about the same?
Related: found about BeoAbo day pass. Is it applicable for our movements and will it be cost-beneficial?
4. Any other sights in the vicinity we should be visiting?

Any other feedback/ tips would be most appreciated.

Hello Sarang! I'd say you've made up a perfect travel scheme for a 5 day stay in Switzerland. It allows you to explore several towns and diverse areas, without the travel scheme being too full. Mt. Titlis, Jungfraujoch and the Golden Pass train are true highlights. A few tips for the 5th day, although I don't know how late you'll be leaving for Montreux and if you have enough time lefti the morning: you may consider a short boat trip on lake Thun or lake Brienz. A nice viewing point, which can be reached from the centre of Interlaken, is Harder Kulm. And for a spectacular lunch or coffee break, consider the terrace on Top O'Met. As for your 4th question: no, there are no highlights I think you should add to your itinerary. Again, it's complete and includes a lot, without requiring you to hurry.

The trip to the Jungfraujoch is expensive indeed, as it's discounted by 25%. Regional passes offering more discount are available, but they're all valid for several days and as your stay in Interlaken is short, these passes would be too expensive. There's also a Good Morning Ticket for travellers on the first two trains each day. This ticket has a reduced rate, but as it's meant especially for those who don't hold a valid rail pass, it won't be an option in your case. The reduction with your Eurail Pass would be better than the reduction of such a Good Morning Ticket. So I don't think there are alternatives. But if weather is fine, the trip up to Jungfraujoch is worth its money! It's absolutely spectacular to really be up and in between the mountains and get so close to huge snow fields and glaciers. A price overview can be found on the Jungfrau Railways website.

Yes, most towns offer a guest card. The hotel personell will hand it over to you. If not, you can ask for it at the local tourist office. Guest cards don't always include free travel, but reductions on local public transport are mostly included. Please review all information on the Interlaken visitor's card and the Lucerne guest card (download the brochure 'Cityguide'). The Lucerne Card (for which a small amount has to be paid) may be interesting as well. The BeoAbo seems to be available for Swiss residents only and is valid for at least a month, so this isn't a good option for you.

I hopes this answers some of your questions!

Just to update you on the BeoAbo pass. There are details (in German) for the Bernese Oberland BeoAbo at http://www.beoabo.ch/info/das-abo-fuers-berner-oberland.html including a zone map, and yes it is availble to non-Swiss visitors. Priced (2011), for a month-long pass on bus, train and some cable-car routes, at 62CHf for adults and 49CHf for over 64's (seniors). You need your passport and a passport size photograph at the time of purchase from SBB ticket offices. Longer duration passes upto 12-months are available.

Thanks a lot for sharing that physoc!