I just found this link. Great page on lice history and it says they used Horned Poppy and Borax to treat head lice. My daughter and I take borax bathes so this may have been our saving grace.
These pages also list the use of dog fat along with swine grease to coat the hair. Tells of finding lice attached to combs found in castles and tombs. Very interesting read. I know this has nothing to do with Iodine to post here but apparently from these writings mercury was heavily used in the treatment of lice. There was also idoform, for which I know nothing about. Thanks for the suggestion of borax.