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You're not considering the energy required to smelt the iron.
Iron filings (in a collected quantity high enough to make manufacturing these heat packs worthwhile) are not a waste product, they are recycled -- saving the smelting of that much new iron.
Sawdust+iron heat packs are a very useful and non-hazardous product, for sure, but aside from situations where a hot water bottle is impractical, hot water bottle still wins.
So.. I really don't know chemistry, and these aren't the highest quality references, but here goes:
Huh. So maybe heat packs are a reasonable use of scrap iron's embodied energy after all. Assuming you have a sufficient source of uncontaminated steel filing waste and that it's economical to collect and process into heat packs.
...But only if you're heating your water using fossil fuels using an inefficient method! If your water is heated using solar or waste heat capture or a heat pump^[4]^, which would swing the balance way over to hot water bottles again.