Here is what Gordon says about V in Old Icelandic:
"V in the 12th century was a voiced bilabial fricative, like the
German U in 'quelle' or Spanish B in 'saber'; during the 13th
century V became labio-dental, like English V, the same sound as
Icelandic F medial and final. Hence a word like 'ævi' was often
spelled 'æfi'. In the combination HV the sound of V was voiceless,
but in the 14th century HV became KV in some dialects."
Yes, this is the same conclusion I came to. The pronounciation of
Modern Icelandic is still essentially that of the 14th century - a
modern speaker would still be able to hold a basic converstation
with someone from the 14th century or later, the obstacles being
mostly lexical and differences of usage. However, to speak with an
Icelander from the 13th century or earlier would require special
training in both pronounciation and usage. Fortunately, we do have
the sources we would need to do it - we *could* send one modern and
well educated speaker of Icelandic or Faroese into the West Norse
world of the 10th to the 13th centuries with special training. I
venture to bet that our 'linguonaut' would find life rather austere
and harsh in those times. I also bet that our 'linguonaut'´s new
contemporaries would find him almost utterly incompetant in the many
tasks of daily life - just like if we were to send someone from the
13th century or earlier into the 21st century. 'OOOOOO!! What´s that
big loud metal bird in the sky!!??' - maybe it´s a good thing that
there´s no such thing as a time machine. More about V and other
strange Latin characters later - especially the vowels.