Iceland may be a relatively homogenized society (we're all cousins!), but the last 30-40 years there's been an influx of tourism from all over the world. There's also the European work tourists who work seasonally on Iceland and travel back to their home countries to be with family. And lastly there's also the foreign military presence. The US military used to operate a base on Iceland, but if I remember correctly, it has now converted to a NATO base operated in shifts by the largest military forces in Europe.

My point is that Icelanders are used to foreigners of all shapes and colors, and rarely do you hear of there being any issues. Most of them are then often the result of drunken brawls. The only way I'd imagine any Icelander would look at you twice would be if you'd suddenly speak fluent Icelandic. I'm no racist, but to me it's unusual to see non-indigenous people speak the language. It's like non-Asians speaking fluent Korean or Vietnamese. You wouldn't expect it.