Andalucia in August - are we nuts?

Yes, you are nuts.
I have based out of Malaga for the past ten years and know well the area and climate.
To help put this in perspective, imagine how much energy and time is lost while sightseeing in the midst of a blizzard; then reverse the climate conditions.
October is an ideal time to visit Andalusia, August is a great time to visit Northern Spain.

I would only go there on the shoulder seasons. Otherwise it is very hot and crammed with tourists. The heat I could deal with the hoards of tourists I can't.

If you are the kind of person that can tolerate the mass of tourists in Rome in July you will be fine. Me: I'd rather poke sticks in my eye than something like that. I realize not everyone feels that way..

Granada (with elevation) at least enjoys pleasant evenings after the heat of the day (as do the nearby Alpujarras villages in the Sierra Nevada). Sevilla and Cordoba can be very hot, but unlike places in central Europe, they do have air conditioning at least.

Temperatures over 100F are not unusual. You will find some shade and buildings (churches, Alhambra, etc) were built to keep out the heat, so there's some relief. On the other hand, you will be outside for long stretches and will have to walk in the sun. Solar noon (sun's highest point) in Seville in summer is around 2.30 p.m.

People always think we're nuts when we travel to Europe in the summer, but for many years our work schedules only allowed for summer travel; plus Seattle rarely experiences such summer heat so we like soaking up the rays. Yes, it's hot in many places, but there is also a fun summer culture when people are at the beach playing, and the beautiful summer mornings and evenings are filled with happy people. We are people watchers and enjoy the holiday vibe. Good planning is key so the heat doesn't take it's toll. This summer we, too, are traveling 5.5 weeks in Spain and Portugal (July-August) touring by car which in itself provides a sense of freedom. Lay out the itinerary, book ahead (we are true believers in booking.com; they have never steered us wrong), then hit the road!

I think that part of the answer is what do you want to see/visit. You have to weigh the "must see sights" vs the hot summer. If you are a bit flexible in what you want to see, there is plenty in the north and usually at a much comfortabler temperature. Santiago, Oviedo, Cudillero or Lastres for example in the west are all worth a visit
Or further east, Bilbao, Donostia, Pamplona, Jaca and the Pyrenees are good to visit at that time.

Often it seems that the weather forecast in the summer is for hot 90-100degrees and sunny, "except for the northern third where it is cool and cloudy."

Food for thought: I was just in Seville in late April and it was so hot (the line for Alcázar offers no shading), this poor teenage girl collapsed from heat stroke and fell head first right into a concrete planter. I can't even imagine what August heat will feel like.

If you do find yourself there, get a huge hat or something that will offer a lot of shade. The temperature isn't as bad as the direct sunlight beating down on you.

Is really crazy to go to Seville between june and september, Cordoba same hot, Granada might be better at night and Malaga, Almeria and Cadiz are great places during the summer because of the sea but not only, of course.