Yes. The government knows. Why else would they be using this deadly “poison” to disinfect the water for a planned future moon station. Perhaps to use something that gives humans the best chance of surviving in a hostile non-human environment? Don’t you just love the way they bury the good “poison” deeper in the story…?
Human Factors
On the lunar base we will have several plans for utilizing the resources on the moon to create: water, hydrogen fuel for further use, oxygen, hydrogen fuel and raw materials for construction and other purposes.
Lastly “Iodine” is used to disinfect water because it is a biocide helps regulate water and bacterial colonies in small amounts. The MCV or Microbial Check Valve can be used to filter water for microbes through an Iodine resin. Regenerative Iodine solutions can be stored and used to replenish Iodine levels in the filter when necessary.