The Buddha's world-view was greatly influenced by Hinduism, the dominant world view in his region during his lifetime. The original Buddhist concepts of karma and rebirth are basically a facsimile of these concepts in Hinduism and were taken quite literally during and after the Buddha's lifetime.
The Mahayana view on rebirth is not necessarily taken so literally. In several Mahayana schools, it is suggested that humans go through incarnations in these realms of hell every waking day when feeling angry, hungry, etc. In Nichiren, this is called "Three thousand realms in a single moment of life".
Also, in Mahayana Buddhism, "death" does not necessarily refer to physical death. Reaching even a single moment of enlightenment is referred to as "the Great Death".
The Tibetan schools of Buddhism - though mostly Mahayana - are, due to their geographic location, more influenced by the originally Hinduist cosmology than other schools of Buddhism, as well as remnants of the local Animism cults (that's why Tibetan Buddhism is the only one to have oracles supposedly channeling the spirit world).
In private conversations with Tibetan monks I've noticed on several occasions that the public-held belief of reincarnation doesn't necessarily translate to personal view. An important factor on why it's maintained so adamantly in (public/popular) Tibetan Buddhism is no doubt the question of succession of the Dalai Lama by a Chinese puppet-lama.