Could someone from Iceland understand me

Most Icelanders speak English, but it doesn't hurt to be aware of your 'please and thank you' to make things go a little more smoothly. Many people have basic knowledge of German, the Scandinavian languages (Danish in particular) and some Spanish and French too. At college level, Icelandic students choose a "third language" to study, often between Spanish, German, French or Italian for example. Many students also opt to study a fourth language. Danish and English are taught at an elementary school level.

http://wikitravel.org/en/Iceland

Icelandic is an ancient norse language not used to communicate outside of Iceland, most closely related to the language spoken in the Faroes. A modern Scandinavian speaker would have similar difficulties understanding Icelandic to an English speaking person trying to make sense of middle English.

http://www.omniglot.com/writing/icelandic.htm

Consider for example the following Middle English:

Whan þat Aprill with his shoures sote
Þe droghte of Marche haþ perced to the rote,
And baðed euery veyne in swich licour,
Of which vertu engendred is þe flour;
Whan Zephirus eek with his swete breeþ
Inspired haþ in euery holt and heeþ
Þe tendre croppes, and the yonge sonne
Haþ in the Ram his halfe course yronne,
And smale fowles maken melodye,
That slepen al the niȝt with open ye—
So prikeþ hem Nature in hir corages—
Þan longen folk to goon on pilgrimages,
And palmeres for to seken straunge strondes,
To ferne halwes, couthe in sondry londes;
And specially, from euery shires ende
Of Engelond to Caunterbury þey wende,
The holy blissful martir for to seke,
Þat hem haþ holpen, whan þat þey were seke

http://en.wikipedia.org/wiki/Middle_English

Icelanders do not expect to communicate in Icelandic when abroad, any more than those who speak Inuktitut, Inuinnaqtun, Cree, Dëne Sųłiné, Gwich’in, Inuvialuktun, Slavey, or Tłįchǫ Yatiì would expect their languages to be used outside their own communities within Canada.

http://en.wikipedia.org/wiki/Canada

I don't think the language issue would prove any more of an impediment for those now living in Iceland, than it already does for many living in Quebec, New Brunswick and Nova Scotia.

I very much doubt that Iceland would insist that Icelandic be added to all Canadian packaging, though I am sure they would want Icelandic to continue to be Iceland's official language.