Also note that Icelandair didn't allow children to have frequent flier miles accounts at all when my kids were small. I filled out the form on our first flight without reading the fine print; only adult account was created.

Reading up on their FAQ page today, it looks like only kids over 12 can have accounts created, with parental permission.
https://www.icelandair.com/frequent-flyer/faq/

Mine were younger than that on our first flight to Iceland, and since then we've just credited FI miles to our Alaska Mileage Plan accounts where we tend to earn elite status most frequently. Saga Points expire.

As for time at KEF, it is an efficient airport, but it can get busy and it doesn't work quite like a domestic US airport, so there could be unfamiliar expectations. (I don't know what the peak times are, though.) I'd factor in how efficient my own family of four is at getting through airport security (and whether you need to check bags, are in Saga premium class for shorter lines, etc.) Missing an international flight could be very costly.

Official guidance from the airport website is "[f]or a relaxed experience, please arrive at the airport 2.5 to 3 hours before your flight." I'd aim for that range if I were an infrequent traveler, if I had checked bags, and/or if I was flying in coach (especially if I had child safety seats or toddlers to manage.) As a well-traveled grown up, or flying carry-on-only in Saga Premium (business class), I'd consider 90 minutes tolerable (but I am also not a person who enjoys cutting things close; I like a wide margin for error.)
https://www.kefairport.com/check-in-information