In response to your inquiries:
1. SAS code-shares with some Icelandair flights.
2. See
http://www.icelandair.com for points on Icelandair. Icelandair is also an FF partner with SAS and TWA.
3. I spent 24 hours there in August of 1998. It's definitely worth at least a brief visit, and I understand that the interior mountains have terrific hiking. If you go, be sure to visit the Blue Lagoon--it's a surreal experience.
Icelandair is also offering $99/1W from the US to any of their European destinations in Jan/Feb. I wouldn't be surprised if they're offering a parallel deal from Europe to Iceland.
[This message has been edited by chalf (edited 12-17-1999).]
[This message has been edited by chalf (edited 12-17-1999).]