I think your sed oneliner is ok for the task.
Besides, you can optimize that for speed (considering the file has millions of lines), exiting the sed script when the desired block was printed (assuming there are no repeated blocks of time in a file).
sed -n '/^06:25/,/^08:25/{p;/^08:25/q}' logFile > newLogFile
This tells sed to quit when the last line of the block was found.