It's more a case of recognising their context. Take Brazil as another example. It has reported, now, half a million cases and about 29,000 deaths, but has tested less than a million people. It is entirely sensible to suggest that the true number of cases is rather a lot higher, since around 99.5% of all Brazilians won't have been tested. In that case, the only fair way to compare like with like is to find a measure that isn't dependent on how many tests are being carried out or on who is tested in the first place. Hence the attempts to estimate the Infection Fatality Rate, or, one step further, by stripping out any direct reference to confirmed/suspected cases and just looking at the excess mortality. Ironically, then, this is actually the way to generate the fairest comparison, and hasn't anything to do with a preference other than that.
As another case in point, consider the picture in Russia, which, by the same measure, is reporting a Case Fatality Rate of 1.1%, or something like 13 times "better" on the face of it than in the UK. Assuming that the figures are entirely accurate, which is already a bit of a stretch, there are at least three points that make the comparison misleading:
1. Russia has, it claims, done more testing at a greater rate per head than the UK;
2. The disease is at an earlier stage in its progression in Russia as compared to the UK, so it is likely that their death rate will rise for a while when the UK's is falling (hopefully).
3. Most importantly, the criteria for counting deaths in Russia are different, relying on full autopsy reports supporting death from Covid-19, as opposed to a death included if Covid-19 is mentioned on the death certificate.
Finally, of course, there's the question of whether the data from Russia (and Iran, China, North Korea, etc) are even trustworthy. It's been suggested that earlier in the year Russia reported that there were no Coronavirus cases, but a curious spike in pneumonia deaths at the same time. Again, the only way around these anomalies is to hope that people can at least count actual dead bodies correctly.
None of this means that the Case Fatality Rate isn't worth measuring, but it can't be used in the way you used it at first, ie when comparing the UK's and Iceland's response. Which is a shame, because it's probably right to consider Iceland's response as more effective. In that sense I kind of feel like it's a "right for the wrong reasons" post: Iceland's response has been more effective, but it isn't the Case Fatality Rate that tells us so.