Well, in former Civs you could switch which city was your capital by simply building a palace in a new one. It would really make a lot of sense that they bit back.
BTW could I ask sources about Toledo deemed the equivalent of the capital of Castile at that time. I find it specially curious because I even lived for a couple years in a village of Toledo, Los Yébenes, while doing anthropological research and never heard of that fact.
Burgos was caput castellae, hence it had the rights to expose first when the Castilian courts meet, and in Valladolid there was the main judicial power of the Crown of Castile, the "Real Audiencia y chancillería de Valladolid". The courts used to meet nearby Madrid (Alcalá de Henares, Toro, Madrid itself etc.). And Isabella lived many years in Seville, from where the Castilian Armies were lead during the final stages of the "Reconquista" (this one is indeed considered by some historians as kind of the "capital" during her reign).
Well my Iberian history is a bit rusty these days, but if I recall right the decision by Philip II to move his court from Toledo to Madrid was one of those important points in history at the time. Maybe I'm mistaken.
In any case, the important point of the prediction is "not Madrid" rather than Toledo. We'll see on that front.