They're not raised nodules, nor have they been. The day after I posted this I got out of the shower and looked. My skin (my whole underarm) was dry, showing signs that some skin had peeled away. It made me question my self-diagnosis. Today, the red spots are still there, but the dryness is gone. So they're not irritated either.
If it makes any sense to the Iodine veterans, I had just gone to 8-12 drops this last week. Would this create the reaction?