The RAV4 is great fun to drive, on-road and off. It's roomier than a hatchback, with good ground-clearance. The small engine is surprisingly powerful. It's off-road performance is reasonable for a car, although it doesn't compete with a Jeep or anything built on a truck frame. It handles wet weather, snow and mud like a dream. The interior is functional, but not everyone is going to enjoy the seats. In essence, the RAV4 is a compact station wagon with ground clearance.
The handling on the RAV4 is good for a truck, bad for a car. The body roll is noticeable, but never scary. Some people might have motion-sickness issues, but I have never ridden in an SUV or truck with less body roll. The turning radius is not spectacular, but the tiny wheelbase generally makes up for it. Parking is never difficult, especially with the generous windows.
The engine could be more powerful, but Toyota has a really great small engine in the RAV4. It takes some heavy friends to notice a difference in power. Even stuffed to the gills with camping equipment, I had no problem driving it on-road in the mountains. The standard transmission can help squeeze more power out. It cruises comfortably up to 80 mph.
The exterior is a love it/hate it design. I fell in love with the styling instantly, but not everyone agrees. The cladding on the lower half is great for preventing minor dents from cars, but many larger trucks have doors high enough to hit paint. The cladding works wonders in preventing scratches from brush, however.
I love the interior, and have never had a problem with the seats. A few of my friends love the seating, but some of them complain. If it fits your body, it's great. For such a small car, it accomodates large people surprisingly well in the front seat. I have seen a 6'5" person drive it in relative comfort, and have put a 6'2", 400lb man in the passenger seat. The back seat is a completely different story - squeezing in and out can be quite a chore if the front seats are pushed all the way back. Carrying stuff is a completely different story - both front seats have a good amount of space underneath them (although the jack takes up some of the space under the passenger seat), the glove compartment is reasonable, and the rear compartments are great for keeping paper towels and emergency road gear. Anything roughly cubical fits great in back with the seats down, as do short bikes - my touring 18-speed is cramped. The one shortcoming is anything that is long - I can't even fit a 5' folding table in back.
My respect for the Toyota air conditioning continues to improve. With a dark grey interior and a black paint job, minimally tinted windows (which seem even bigger on the inside) and hot Texas summers, I have not once felt too hot more than a minute after turning on the A/C. The stereo system is on the bad side of adequate, but is easily replaced with something better. Just replacing the speakers should be enough for most people.
The price is definitely high. The RAV4 is popular enough that I have never seen a dealer incentive offered on it, and all the options are pricey. Although the base price is around $17,000, mine cost $21,000 with sunroof, cd player, auto transmission, security package and alloy wheels. Still, I can't think of a single car or SUV under $22,000 I'd trade it for.