I fly MAD-AGP about once every 2 weeks, and adding to what AlanW has said:
*IB is supposed to, in theory, offer priority boarding to all Business Class/IB Plus Elite customers, however, on domestic flights, for some reason which I cannot fathom why esp since they code-share with airlines that regularly do such as AA, they do NOT announce it, and it's up to you to cut to the front of the boarding line and politely mention you are traveling in Business and then they should whisk you right in without having to wait the massively long queues.
*Your best bet is a morning flight as a full (it is actually filling even by American standards) hot breakfast is served on breakfast flights. The afternoon and evening flights just recieve a ¨refrigerio¨ cold snack service consisting of Spanish cold-cuts, cheese, etc.
*The lounge in AGP is not an Iberia lounge, it is a lounge provided for the use of all the airlines in AGP's premium customers and it is a basically a glorified waiting area with a VERY light offering of snacks which are usually stale.
You will notice a HUGE difference between the luxurious IB lounges, which also now serve full food offerings FYI, in MAD and the no-frills one in AGP.
Hope this helps out as well!