> As for changes in
> pronunciation in general, Norwegian has remained conservative in this
> respect, and so the reconstruction is based on combining Norwegian
> and Icelandic.

That's certainly an oversimplification - but it is true that Icelandic,
Faroese and the mainland Scandinavian dialects have preserved different
parts of the "original" pronunciation.

> As far as I know, Norwegian institutions are more
> consequent in using the "correct" pronunciation, while on Iceland
> there is a tendency to use a pronunciation close to modern Icelandic.

Not 'close to' but 'exactly the same'. As for Norwegian pronunciation
(from what I've read of Norwegian ON grammar books) it seems you use
a pronunciation based on a mixture of "what's correct" and "what's
easy for us to pronounce".

Kveðja,
Haukur