Jiraiya is a very intelligent fighter (up there with the likes of Itachi, Minato, Shikamaru etc) and SHOULD just beat 3rd, although the Third will put up a great fight. Im not sure how proficient he is in handling genjutsu. If Ma and Pa work their magic early on, the fight could be over in a matter of minutes.
As Shikakau, father of my avatar said, "Sage Mode takes him to a whole different level" (he said this about Naruto). Jiraiya's enhanced speed, strength et al make him a terrifying opponent and can hold his own against almost anyone in Narutoverse (apart from SO6P)
However, one hit from the 3rd Raikage's finger strike and its game over. This fight has all the possibilities of ending quickly, depending on when they use their trump cards.
Actually, scratch all that. Swamp of the Underworld will REALLY slow the 3rd down, leaving him open to genjutsu and any jutsu Jiraiya wishes to use. It'll just be like tying a guy up and just punching him till his lights go out...
Even if the above strategy doesnt work, Jiraiya ftw, as he seems to be the more intelligent fighter and had a huge variety of jutsus. He also knows a lot about seals (undid Oro's seal on Naruto, and great general knowledge on seals) so he could Swamp of the Underworld and seal the 3rd up.
Good fight between 2 people with great reps. One is the ultimate human shield, while the other is a legendary Sannin.