Interesting question.

BA may not be interested in through checking your baggage to Iberia if not on the same ticket. I recently flew LON/CAI with BA and had LH RTW ticket commencing Cairo. Took 3 tries before I found friendly check in clerk who would through put baggage LHR/CAI/FRA/BKK.

If you are hoping to have no Immigration stamp in your passport it will not work using the transit desk. It's stamped !!

System is unusual but WORKS. As stated your passport is taken but in reality seems to remain in a drawer in a desk within your view... Not so bad. What is unusual however is that your checked piece of luggage is brought to the transit area rather than awaiting your onward flight with that flights luggage. Not sure why. On receiving my boarding card for the LH flight they took the luggage away again for the flight.