Particulates are formed from both primary and secondary pathways. Primary sources such as coal combustion, biomass combustion and traffic directly emits particulate matter ,whereas, high secondary aeroso(particulates formed through atmospheric oxidation and reactions of gaseous organic compounds) contribution to particulate pollution. .Interesting PDF enclosed for further reading..
Check out the WHO air quality guidelines: http://apps.who.int/iris/bitstream/10665/69477/1/WHO_SDE_PHE_OEH_06.02_eng.pdf
Seems iron particles as you say are behond the norm recommended value for particulate matter,
WHO air quality guidelines and interim targets for particulate matter: annual mean concentrations of PM2.5(μg/m3), must have maximum a value of 10 (page 11). So yes, the particles in the air can have various impact in health (http://www.who.int/whr/2002/en/whr02_en.pdf).
Appart from the particule problem on top of that you should check on studies of toxicity of iron. Maybe again looking at the WHO drinking water quality guidelines:
http://apps.who.int/iris/bitstream/10665/44584/1/9789241548151_eng.pdf, page 223, Iron is not considered as a toxic element for health in drinking water, as you can read in page 165.