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1) Jazz is just the name for AC's regional service. Like Continental Express. No big deal, really. You will have to clear Immigration and Customs in Canada and drop your bags back off for the onward flight. With the long connection you have that won't be an issue.

2) Your choice on Immigration & Customs. Your bags should be checked all the way through but with 7 hours to kill I'd definitely leave the non-Schengen transfer area that the TLV-BRU flight will leave you in. You'll clear immigration at BRU but your bags (other than whatever you're carrying) won't. That makes it much easier to deal with. You can take the train in to Brussels or up to Brugges or to a number of other places nearby before returning to the airport for the flight to IAD.