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Hood River is a walking town, a bicycling town and you can see alot if you do have that car that you came in, just park on the upper streets which seem to have more parking available. If you came from the Portland area and have a car rented already, so much the better.
You will be able to take in the Fruit Loop, the new Event Park (to watch the kite-boarders and para-gliders,) many historical buildings and many wineries in the area (many on the Fruit Loop such as the Gorge White house on Oregon 35.) At the Gorge White House you can sample many area wines in one place and pick up some to take home (or have it sent) or to your hotel for the evening.
While Washugal may seem close, (mileage wise) you wouldn't want to rent a car there as it is on the Washington side of the river and can be just a plain hassle. Mostly people arrive in the car they have picked up when they arrived in the area either by rental or with the friends they came to see, who drove them out.
Traffic is light throughout the region although parking can be a problem especially on busy weekends. Driving is the best way to see most of the natural attractions here, famous in this beautiful area. Be aware, the Hood River Police have their hands full, ticketing cars over due to move on. After-all, some of those doing the parking for long periods of time are the very business people who get busy helping the visitors and forget to move their cars.
There are bicycle rentals for the slightly more adventurous. You can find bicycle rental venues all over while wondering around town. Sometimes striking up a conversation at lunch may get you a great heads up on a deal.