Arrive at 7 am....through immigration and customs by 800 if all goes well. Take the Airport Express Bus (well marked) to Atocha, 25 minutes travel time, five euros, to the front door. Go through the ticket counter (get a number just like in the ice cream stores here in the states) and go to the platform (through x ray of your luggage. The actual travel time is 25 minutes. Most likely you will get a 10 am or there abouts train. So, 1030 you are in Toledo. Fifteen minutes by taxi to your hotel...get the taxi at the front of Atocha train station.
You will not have time to get much sleep on the train, 25 minutes, smooth ride. And, you may not be able to check in your hotel that early. Most have an afternoon check in time. But, at the same time, you would not be able to check in a hotel in Madrid at 8am either.....Either way, little help with jet lag I fear....