You’re not considering the energy required to smelt the iron.
Iron filings (in a collected quantity high enough to make manufacturing these heat packs worthwhile) are not a waste product, they are recycled – saving the smelting of that much new iron.
Sawdust+iron heat packs are a very useful and non-hazardous product, for sure, but aside from situations where a hot water bottle is impractical, hot water bottle still wins.