Thanks all for your valuable answer.
JP Rail it is.
Obviously you have to purchase the 7-day JR Pass before you come to Japan, unlike the JR Kanto Pass which can be purchased in Japan.
I will be going to Takayama from Tokyo from 13 April 2013. Yes, I'm going there for the Spring festival.
I assume you have booked your accommodation already?
I believe I have to reserve my seats looking that there will be alot of people heading that way and the 1st day of the festival is on Sunday.
Yes. Note that you can start making your train reservations as soon as you exchange the voucher for the actual JR Pass, even if this is before your first activation date.
ie. exchange voucher for JR Pass at Narita on April 9.
Set activation date as April 13 when you exchange.
On April 9, at Narita, make a booking from Tokyo to Nagoya to Takayama for April 13.
If the staff are busy at Narita they may ask you to make the booking elsewhere, so just do so at another station in Tokyo that day or on the 10th.
I will probably reach Kusatsu Onsen on 18 April 2013.
Seems fine then. I'm not sure on the timing of the announcement for Murodo.