I would only stay the first night in Reykjavik, and then head out. However you are extremely late to planning for this year, so your itinerary will depend upon what lodging you can find. To give you an idea, we booked our south coast lodging back at the end of March and had a very hard time finding places even then. I knew that would be the case as we go often, but this trip was booked on a whim, so we had to really finagle our interary around what we could find. With 8 nights, minus one in Reykjavik, that gives you 7 to go up to around Hofn and back and then stay your last night closer in, say Selfoss or closer, so that you are close enough to the airport so in case of any accidents, road closures, etc you have a buffer built in.