I had a 2005 (I think that's a 2nd gen?) Prius for awhile. It was ok, but I didn't love it. That said, if you drove a car and loved it immediately, that's a really good sign that it's a good car for you! (kind of like bikes, right?)

I will say that YES, a hitch rack will destroy your mileage. We drove across the country in February in two cars a few years ago. I drove the Prius, my husband drove our Matrix and both were similarly loaded up. We put the hitch rack and bikes on the Prius figuring that it would only hurt the mileage enough to allow us to both fill up at about the same time. We were wrong. The Prius mileage with the rack (and two bikes on it) dropped from a winter hwy average of about 44 mpg to about 36 mpg. And I was terrified that it wouldn't make it over the continental divide past Denver! The battery was down to 1 bar even though it was running on the gas engine at the time and I'd never seen that before! What happens when that last bar disappears? Eek!

Anyway, we pulled over at an Ace hardware, bought a socket wrench and moved the bike rack to the Matrix. Matrix mileage dropped from an average of 33 mpg to about 30 mpg - even with the rack on it. We think it's because of the shape of the Matrix (it kicks up a bit in the rear where the Prius slopes down). This was a big reason why we eventually kept the Matrix and sold the Prius the following year.

Anyway, if you are buying a Prius for the gas mileage (particularly highway), then do NOT put a rack on it. If you are buying it because you love driving it, then don't worry about it. Even with a rack on it, mpg will be better than your Cherokee anyway.