My experience of the bike-hire scheme in Brisbane (Australia) is that helmet laws are a problem, but not the problem. The legal requirement to wear a helmet is a bit tiresome, and the communal helmets they supply to get around it are a figleaf at best, but helmet law or no, riding a bicycle in Brisbane is harder than it has to be.

The problem, as others have pointed out, is road design and driver attitudes. Going any significant distance involves either riding (legally) on footpaths, or riding in traffic. There's a nice bicycle path along the river, plus some pictures of bikes in doorzones. That's about it for central Brisbane. It's not that hilly but it's definitely not flat. I don't mind riding in traffic, but I say that as a bike racer (albeit an old, fat bike racer) who used to be a courier. Driver attitudes, well, 95% of them are fine, maybe more. There's a small minority who are deranged and vicious and it's socially acceptable to behave that way in a car. It's all do-able, but it needs some unintuitive techniques (ride in the middle of the road in some situations, for example) and, ideally, a bit of fitness. I don't know as I'd recommend it to neophytes.

That helmet laws are the problem is an appealing conclusion, because it's a quick fix: repeal the helmet law. Changing infrastructure OTOH is hard and changing attitudes in harder still. I'd like it to be as simple as repealing a law, especially one where the benefits are so unclear. I just don't think it is.

In terms of the popularity of the bike hire scheme, I can only say that there are a couple of dozen hire bikes out the front of my workplace at the start of the day and it's down to a couple by day's end. I'm not aware of the official figures, but my highly subjective impression is that they're getting used more than when it started. A less convoluted signup process probably has something to do with it, plus the fact that it's a pleasant time of year to cycle.