Firstly, I'd say that as they go, Sydney domestic isn't such a bad airport to wait in, so it wouldn't be the worst thing if you took the later flight.
Taking the earlier flight is definitely risky. Few things to consider:
--I don't know where the A380-compatible gates are, but I'd guess they're near the ends of the piers for easy access. Just getting from the plane to customs if you're out at the end can be a 10 minute walk at a normal pace. That's on top of however long it takes you to actually leave the aircraft.
--7am is massively peak time at Sydney international arrivals. There are a lot of flights from . . . well, just about everywhere arriving at exactly the same time. I would not anticipate getting through customs in any less than an hour, and depending on your luck with quarantine it could take longer. One tip: after you have your bag, normally you have to wait in a line to have your bag x-rayed. These lines can be epic, but if you find a uniformed quarantine officer in the baggage claim area, they can stamp your arrivals card and let you through. Be smooth about it, though--they're supposed to be picking people at random, so if you act too eager to see them, they may suspect you have something to hide.
--Don't bring any food of any type (or at least don't say so on the arrivals card)--that will seriously reduce your chances of getting waved through by the quarantine officer who stamps your card.
--There is no way to walk between the International and Domestic terminals. There are a few different bus services that connect the two, but I have no idea how long they take. The fastest option may well be to take the CityRail train that runs under the terminals; since you'll be headed in the peak direction for the morning commute, trains should be running frequently. You will however have to pay for this ticket. Depending on your luck with getting the train, this trip could take anywhere from 5 minutes to 15. The station is within the International terminal and a 2-minute walk from the Domestic terminal.
So . . . no, I really don't think you can make the earlier flight.
[Edited 2007-09-19 17:35:59]