Well, I'll say it too, there are a lot of opinions both ways, so I'll tell you what I do and why but you will have to weigh the choices and decide for youself which is best for you. I made the decision to tow with a tow dolly basically because the car I wanted to tow, a Toyota Prius, was not towable 4 down and Remco does not have any product that would modify it to tow 4 down. I would have had to either trade the car in for one that is towable 4 down, which would have been expensive and contrary to my DW's wishes, or use a tow dolly. I bought a new tow dolly with electric brakes for $1,500 and it works great towing the Prius. I think by the time you buy a tow bar, base plate and installation for the toad and a brake system for the toad you will spend at least that much or more. Then if you change your toad you have to buy another base plate and have it installed.
Many say that it is a problem storing the dolly at the campground, but I haven't found that to be the case. Once I unload the car and unhook the dolly, I just push it up under the back of the coach and it only sticks out about 2 - 3 feet behind the rear of the coach. My dolly has removable ramps so that helps with the length during storage. Some say it's harder to hook up than a tow bar. I don't know how long it takes or how hard it is to hook up with a tow bar, but I can hook the dolly up by myself, drive the car up on it, strap it down and be ready to roll in about 15 minutes. The dolly tracks the motorhome very well in turns and I haven't had any problems using it.
As far as backing up, I have backed up mine a few feet when necessary, but it's not something you want to do often and you don't want to back up very far. The problem with backing a dolly with a car on it is that the platform that the front wheels sit on swivels, so when you back up there is a possibility that the fender of the dolly could hit the fender or door of you towed vehicle. If you don't have to back up very far, you should be OK. You just need someone to watch for you as you do it.
Again, listen to the advice of others who have done it both ways and then decide which way will work best for you.
Dan