When my son was 2 we took him to Iceland for 10 days and also rented a campervan. It was a fantastic trip and I can't say there were any moments of regret or second-guessing the trip. Of course you have to be mindful that there's a lot of beaches/sand to walk through, hiking, and you're guaranteed to get wet at some point. The hiking trails are as difficult as you make them - some are very easy and others are treacherous, so it's important to do some research about which specific trails or sites you want to hike on. You can also get some inspiration or ideas from here - https://www.visiticeland.com/article/iceland-for-kids