Hi Anth,
I'm a member of the car club and it works very well for me indeed. I have hired the van on market street twice and it did the job very well. The central location was excellent although some hire companies like Enterprise will pick you up from home, take you to the car hire place to complete the paperwork and you can drive from there.
On a cost basis you can get really good 24 hour deals elsewhere especially if you book well in advance and take a van at off peak times. I have done deals where I pick vans up at 5pm and drop them off at 8am the next morning. If sponteneity is important then you can't beat the car club. You can check if the car is free from an iPhone and reserve it for yourself.
There are of course over 100 cars dotted around Edinburgh so in terms of 'temptation' some pretty complex and fun logistics can be had if you throw your bike in the back. The estate cars are pretty good too. They make a mountain biking trip to Glentress Forest quite easy without having to remove the bike wheels.
As far as subsidies go having attended many a car club AGM there is no council subsidy for the car club. It is purely a commercial enterprise. My guess is that the relatively high volume of rentals by the council helps keep the car club afloat. The vehicles near the council headquarters are for sole council use during office hours then we can use them after 5pm. The club has yet to make a profit and will only do so once it reaches a certain size. New members are therefore not just welcome but essential. If you have any more questions I'd be delighted to try to help out.