None of what you say indicates that Iceland is actually in Europe.
Yes, you're right that it is a convenient waypost between the North America and Europe. But the key point here is between.
You are also right that there is the ability to put pressure on Iceland from lots of places, including the USA and Europe. However compare how much independence Iceland feels with European countries of the same size. In population it is in the middle of Luxembourg, Malta, Jersey and the Isle of Man. Which of those is even remotely comparable?
Yes, you're right that it is a convenient waypost between the North America and Europe. But the key point here is between.
You are also right that there is the ability to put pressure on Iceland from lots of places, including the USA and Europe. However compare how much independence Iceland feels with European countries of the same size. In population it is in the middle of Luxembourg, Malta, Jersey and the Isle of Man. Which of those is even remotely comparable?