I'm also a Tarptent Squall 2 fan! It was my original lightweight tent and I still use it when taking out a grandchild (I find it's best to take them one at a time). However, I question if it is sufficiently wind-resistant for Icelandic conditions.

For greater wind resistance, you might want to look at the Mountain Laurel Designs Duomid (you can buy a netting inner for it) which Andrew Skurka used on his epic Alaska-Yukon expedition.

From what I've seen of Iceland in pictures and from descriptions I've read, you're going to have rain, high winds and little or no natural shelter. In other words, extreme conditions!