Driving to and within Mexico doesn't present any issue but you will need a couple of things, assuming you will be there as a tourist for a relatively short period. First, you need to get your FMM (Forma Migratoria Múltiple) which is essentially a tourist "visa" valid for up to 180 days that you get from the INM ( Instituto Nacional de Migración). If you drive there, you will get it at the border or on line before your departure. Cost is now 500 pesos. If you fly, it will be handed to you during the flight by the flight attendants and in this case, the cost in included in the fare. Do not lose it, you need to hand it to the INM before flying back to Canada, or at the aduana office when you leave Mexico (most people don't hand it back but legally we are required to do so), otherwise you will have to pay again to get a new one, plus the bureaucratic red-tape they might try to impose on you.
Second important thing when you plan to drive in Mexico is to obtain Mexican auto insurance, wherever you are driving in Mexico. Canadian-US auto insurance is not valid in Mexico. Again, you can get it before crossing into Mexico (I get mine from Don Smith in Nogales), or on line. If you stay for an extended period of time, you can cancel or suspend your Canadian auto insurance temporarily while you are insured in Mexico. Don't forget to reinstate your insurance before crossing back into the USA. My Mexican insurance cost about $400 per year, full coverage and liability, for a 2004 Nissan X-Terra.
Next is the Temporary Import Permit (TIP) for your vehicle. If you only travel to the Mexico Free Zone (all of the Mexican state of Baja and portions of Sonora), you are not required to have a TIP. Otherwise, you must get it, either on line, or at a Banjercito office at the border. The TIP is valid for up to 180 days and should match the validity of your FMM. It includes the fee ($44US + tax) and a refundable deposit that varies from $200US to $400US depending on the age of your vehicle. This deposit is refundable as long as you stop at the Banjercito office to cancel it before it expires. This must be done or you lose the deposit.
Driving is Mexico is not very different from driving elsewhere. Just don't drive at night, not because of bandidos, but because you won't be able to see pot-holes the size of VW bugs, giant topes (speed bumps), burros, chicken, cattle, goats handing on the road, pedestrians, cyclists, drunk drivers, cars without headlights, etc. But other than that, driving in Mexico is not a big issue, and while Mexican drivers can sometime drive like maniacs, they are not aggressive whatsoever. Mexican roads are not so bad especially if you stick to toll roads, but you would then miss most of the best places, little pueblos, etc. I personally try to avoid toll roads, not because of cost, but because I enjoy driving slowly, no more than 3-4 hours a day, and stop at little pueblos to check out the outdoor markets and have lunch. As for road blocks or police, we hear a lot of horror stories. In our case, every road block we had to stop, the police officers waved us, or if we had to stop, they were very pleasant and polite and let us go after asking a few questions and checking our documents. No bribe (mordita), no threat, no attempt to ticket us for something we didn't do or didn't have. We may or may not have been lucky, but that was our experience driving 25,000 km over six months. In some areas (Chiapas, Michoacan, etc.), you might get stopped at a road block manned by masked community "vigilantes" armed with guns. Just smile and wave, and drop 10-15 pesos in the donation bucket and you're good to go. If you want, you can keep a few cold beverages in your car for the guys. They always appreciate the gesture.
That's the easy part. The rest is up to you. To tell you how much my wife and I enjoy Mexico, our original plan was to drive the Americas from the Arctic to Patagonia over a period of two and a half years, with a one-month stay in Mexico before crossing to Central America. After spending our first month in Mexico, we realized that passing through this incredible country in a month wouldn't do it justice, so we decided to stick around the whole winter, and go back next fall for more. We might just scrap our original plan entiredly and hang out in Mexico for several years. And Mexicans as a group are probably the most gracious people on the planet.