It is true that mass transit wouldn't help congestion in smaller communities, but rural areas do not suffer from congestion like metro areas. You are also right that it wouldn't be fair for someone in a rural area to subsidize an urban dweller, but even if federal fuel prices were tripled (increasing fuel prices by $.368), the average person's gasoline costs would increase by only $23. (1250 mi/mo / 20 mi/gal x $.368=$23.00/mo) This cost is hardly oppressive. The benefit of increased fuel revenues would also allow improved rail service between metro areas. A national rail service is unlikely, but improved rail for areas like Boston-New York or San Diego-Los Angeles would save millions of wasted man hours every year spent in traffic and further improve air quality in these areas.
The subsidy for hybrid vehicles would be to make them competetive with the lowest cost segments(kia rio, hyundai accent, chevy metro). These are the lowest cost new vehicles for sale. Moving hybrid vehicles into this range would make them a viable alternative for middle class buyers,(poor do not buy a large number of new vehicles) instead of just the evironmentally conscious with extra money to spend. The idea is to push the standard gasoline vehicle out of the market and accelerate research and development in this area. I do not believe current market pressure is sufficient to get a large number of hybrid vehicles to market in a reasonable amount of time.
I am really glad that there are people in these forums that have something intelligent to say.