Yes. See question 6 here:
Can I enter the Schengen area in country X, while the visa was
issued by Schengen country Y?
As a general rule you may cross any Schengen border with visa issued by any Schengen
country. However, the short-stay visa does not automatically entitle you to enter the
Schengen area. See FAQ no 16 on checks at the external borders.
FAQ 16 is this:
Do I have to present any other document at the Schengen external
borders apart from my travel document with the Schengen visa?
The short-stay visa does not automatically entitle you to enter the Schengen area. At
border (or during other controls) you may have to show the visa but also provide
additional documentation, for example information on that you have sufficient means
to cover the stay and the return trip. It is therefore recommended that you carry with
you copies of the documents which you presented when applying for the visa (e.g.
letters of invitation, travel confirmations, other documents stating the purpose of your
Since what you presented to get the visa is no longer valid, you should also have a good explanation for your change of plans (which IMHO you do, but border officers may think differently).
You added that you actually intend to enter the Schengen area in Iceland, so you're using the visa Iceland issued to you (via Denmark as their representative) to enter Iceland. The fact that the itinerary changed may still come up, but it is much less of an issue since the "visa shopping" issue that was raised in the comments is much less of an "issue" in this scenario: you have Icelandic visa and you are in fact seeking admission to Iceland.