Is the JR pass worth it for trip?

I will be traveling around japan for two weeks, hitting three cities (Tokyo, Kyoto, and Osaka). When looking into travel options, I noticed the tourist rail pass is expensive, ($450 for two weeks).

Is it cheaper to buy tickets as needed between the cities? Does the JR pass also allow subway travel once in any of the cities?

I welcome your advice. Thanks!

Depends on your itinerary. If you're doing a round-trip shinkansen between Tokyo and Osaka (for example, flying into Tokyo, going to Osaka/Kyoto for a few days, then returning to Tokyo), it might be good to get a 7-day pass for that part of the trip. If you're flying into Tokyo and leaving Osaka (for example) it probably wont pay off.

So it's better if you post your general plan so we can see what works best for you.

A 2 week JR Pass, as suggested, would not pay off if you're only going to see the Tokyo and Kansai areas.
So you have 3 choices, all of which have some merit. One is to divide your time half in Tokyo and the other half in Kansai, and get a 7 day JR Pass. You can see Tokyo and nearby areas, then activate it just before going to Kansai, and return within a week (assuming you're leaving out of Tokyo again). There are many places near Tokyo worth seeing, including Kamakura, Nikko, Hakone, the Fuji 5 Lakes area, etc. You can also get some regional passes for some of them - see:
http://www.japan-guide.com/e/e2357.html
Another choice would be to get the 2 week pass, and extend your itinerary. If you went to Hiroshima for a night and saw Miyajima (one of Japan's best places) and the city, that would make the 2 week pass worth it.
You could even go down more to see Iwakuni - it has one of the most famous bridges in Japan:
https://www.youtube.com/watch?v=0COOZXi66mM
Or see Okayama - Korakuen is a beautiful garden there. Nearby Konpirasan in Kagawa makes a wonderful day trip and a fantastic mountain walk to a splendid view:
https://www.youtube.com/watch?v=ley9rVIewoQ
One other choice if the above doesn't appeal to you is fly Tokyo-Kansai - there are many low cost carriers like Skymark, Jetstar, Starflyer, and Peach. Or ANA has a special fare too:
http://www.ana.co.jp/wws/us/e/wws_common/promotion/experience_jp/
BTW since you'll be in Kansai, don't miss Nara either - it is a must-see place. You can see a lot of Kyoto in the day, then when the temples/shrines close about 5PM you can zip over to Osaka for the evening. There is a lot at night, such as Dotonbori:
https://www.youtube.com/watch?v=COJ_MeXbeow
as well as the Umeda & Abeno Harukas Bldgs:
https://www.youtube.com/watch?v=xb1wuyAGgyQ
https://www.youtube.com/watch?v=-AyUZmGbW8g
Kyoto is the jewel of the area though. Some places like Kinkakuji you can easily see in half an hour; but other places like the Fushimi Inari Shrine can easily take half a day to explore:
https://www.youtube.com/watch?v=EandKTAwfOM
In any case, there is a lot that awaits you.

BTW the JR Pass is *not* valid on city subways. Look at the other passes on:
http://www.japan-guide.com/e/e2357.html
for some options.

Hi All - thank you for the feedback.

We are debating if the 14 JR Pass is worth the ~$850US. It is really hard for me to understand if the JR pass makes sense, based on how our visit has taken shape. It seems like "usability" within cities would make the difference.

My itinerary is as follows.

Anyone have any thoughts?

Day 1: Fly in to Narita / Tokyo, immediately take train to Osaka / Shiga to visit friends

Day 2: Shiga, visit friends

Day 3: Shiga, visit friends

Day 4: Travel to osaka

Day 5: Osaka & Mt Koya

Day 6: Mt Koya, then travel to Kyoto

Day 7: Kyoto

Day 8: Kyoto

Day 9: Kyoto, then travel to Hakone

Day 10: Hakone

Day 11-15: Tokyo, fly back to US from Narita

Usability between cities makes no practical difference. Travel in cities is a few hundred yen per day, which won't influence any decision. The only exception to that it travel to/from Narita (which is more expensive, and is covered by the JR Pass)

Use hyperdia.com to give you an idea of typical train fares for the long journeys that you're planning. Just concentrate on them. Hyperdia's a really useful tool for you whether you're buying individual tickets or buying the JR Pass.

As advised above, use the cost info together with a calendar and see whether there's a natural 7 day period that fits in with your plans and happens to include two or three inter-city journeys. You can always travel via a combination of JR Pass and individual tickets. Our last 16 day holiday worked out cheaper to have a 7 day pass, for the first week and then to buy regular tickets for the rest of the time.