"Did I peel the scab too early when I should have kept applying iodine?"
YES! Do NOT pick at the scab. Leave it alone, keep applying Iodine and it will start itching and will fall off on its own, leaving fresh new unblemished skin.
I removed a terrible ugly skin lesion this way, and the only thing left to be seen is new untanned skin. With enough suntanning you would never know anything was there.
Trust me, the scab will fall off sometime after it starts itching. Itching is the signal that it is ready for a little scratching.