yes I did when I was a poor broke student. Not an experience I was willing to repeat but not awful indeed. Being cramped 7-8 hours in a bus seat is not a pleasant experience, but not so different as being cramped in a plane or elsewhere

If you reserve in advance you can get the discounted seats in the AVE train and IMHO is well worth it paying the difference. But if budget is a real issue, go for the bus.

Depending on how long is your vacation, a good option may be traveling by bus to Zaragoza (well worth it for 1 day visit) and later to Madrid. As with 8 hours on the bus your day is wasted anyway.... if you depart very early from Barcelona to Zaragoza, and take a late bus to Madrid, you may see a nice town in between