Credit cards are widely used, especially in Tel Aviv, and shops and restaurants post the cards they take. I had no trouble using the ATM machines in Israel either. A transformer is necessary to use American electrical devices. I didn't have an opportunity to take any of the Arab buses, though from all the reports I read they are much less comfortable and reliable than Israeli ones. Keep in mind that Egged buses don't run on the Jewish Sabbath, or Sabbat, which begins at sunset on Friday.
Taxis are plentiful in Jerusalem.
When getting in ask the driver to use the meter. If the driver tells you his meter is broken, get out and find another cab. You don't need an international permit to drive in Israel. I found driving reasonably stress-free. Signs were in Hebrew and English, and the drivers no worse than the ones in metropolitan areas of the United States.