There is no good evidence that crustaceans, Xenia, or any of the animals we keep need iodine for health. About the only thing we have in regard to Xenia are a few measurements from a small sample of colonies and some anecdotal evidence that the "corals look better." Unfortunatly, people have seen that the levels of iodine in the corals are higher than in the water and made the erroneous assumption that that implies a need for it. Just because iodine is elevated in an animal compared to the water doesn't imply a need for it. Fish accumulate mercury in their tissue and lots of people have elevated levels of ethanol in them. Neither the fish or the humans are any healthier for it.
Iodine is actually fairly toxic and at least with crustaceans it's most likely inducing molting as a stress response rather than fulfilling some need. Unless you can demonstrate a need for it (which we can't) and accurately test for it (which we can't with hobby kits) I would stay away from it. IMO the potential to overdose and cause harm is much more real than developing some critical lack of it.
I never suggest dosing iodine. Like mentioned about it is fairly toxic and even if you have a test kit, it's most likely not that reliable. When you dose iodine it is used up very quickly by the aquarium and so you can still be doing damage if your readings are low.
It's a lot like testing for P04. You hear about people that are having algae problems but they always test at 0 P04. That's because the PO4 are used up pretty rapidly by the algae making it tough to get accurate tests from.