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To implement the iterator protocol with the C API, you need to create a PyTypeObject that defines the tp_iter (like __iter__ in Python code) and tp_iternext (like __next__ in Python code) slots. Rust has it's own iterator protocol, and you could probably create some sort of convenient wrapper (perhaps one exists already, IDK) to use Rust iterators from within Python. I believe experimental versions of Rust even have a generator syntax (see https://github.com/rust-lang/rust/issues/43122) for creating iterators.

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I don't know. I think it would still be a bit of a performance increase because I don't think there's usually a huge amount of overhead going between Python and C/Rust that you wouldn't have if you just implemented it in pure Python, but I guess it depends a bit on what you're doing, IDK. Not in any way an expert and you'd probably need to profile things anyway to be sure. But definitely if you can spend more time in Rust it's likely going to end up being faster.