Any question answered...

I've booked flights before where the two legged return was £500 cheaper than a single so it's not that surprising (I booked a return and only used the first leg, you can't do it the other way round as if you don't use the outbound then they'll cancel the return).

Have a look on the Icelandair website to see what the single flight cost is. If it's more expensive then you're probably screwed.

I'm certain the price would be more expensive (for a last minute, one-way, flight vs the return booked a couple of months in advance), but I bought two tickets at the price they quoted me. They get the money, fair enough. I'm wondering about the legality of taking money paid as taxes to line their own pockets once those taxes no longer need to be paid.