This was not the case when I went to KEF some years ago.

I would file a complaint with Icelandair and with the Icelandic government. That country is really financially hurting and cannot afford to lose tourism kronas due to asinine "security" policies that go way above and beyond the usual amount of stupidity that passengers already face.

Let them know in no uncertain terms that this practice, whether a one-off (like it sounds due to the duty free refunds) or new policy is completely unacceptable.

The person(s) responsible for this decision should be caned and fed to the puffins.