I am interested in a highlander hybrid. I am going to drive it to work, a 20-minute city drive, and may take it to Tahoe once a year with my families w/o heavy load. Does AWD make sense or simply just a 2WD would do? The price difffernce a dealer quotes me is about $1300 more for a AWD. I am wondering which would make more sense to me? Does AWD cost much more in maintaining the car? and if I don't swift it to AWD often, would it cause some "damage" to it?

Unless you live in region that gets snow on a regular bases you probably do not "need" the all wheel drive. FWD will generally just do fine even in most snowy conditions.

For the one trip a year to Tahoe, if you are taking it in the winter and feel like you need the AWD, then you could just rent an AWD vehicle for the week.

That being said I currently live in a region that gets little to no snow and I still bought the AWD. But I take frequent trips to Colorado, and may end up back in Denver at some time before I sell the car.

As far as maintance. the AWD on the Highlander is actually as second set of motors on the rear wheels that only kick in if the vehicle detects tire slippage. There is no shifting from 2 wheel to AWD. As long as the motors last there is no additional maintance that needs to be performed.

I've had my (actually, when describing it in mixed company, it's my WIFE'S car) HyHi for a couple of months, and have noticed that the 4-wheel drive (rear wheels) kick in quite a bit of the time, mostly when climbing hills in conjunction with curves. I think this is probably a good thing handling-wise, even on dry roads. I think that, for the extra cash, it's probably a good thing to have "just in case". And, when you sell it, you will probably recoup most of the extra money spent.
A GREAT car, and IMHO the best choice on the market for an SUV.

Mountain driving really hurts mpg!

BTW, just to clarify something from your post - you don't "shift" the Highlander into or out of AWD. The AWD does it automatically.