> Do they have April Fools Day in Iceland?

"Fyrsti apríl" :)

> Þakkar hann þeim broeðrum sína liðveizlu,

Completely idiomatic to me.

> ok mun enn sem fyrr eptir framaverk, at þér munuð laun hyggja vinum
> yðrum fyrir sitt starf
> and, as always after glorious accomplishments, I expect you'll think
> to reward your friends for their trouble
> (Ásmundar saga kappabana 3).

No problem.

> enn hvat vilir þér nú bióða Haraldi kononge firir sitt starf?
> but what will you offer King Harald for his trouble

No problem.

> Hann kallar ok biðr allþarfliga örninn friðar, en hann segir at Loki
> skal aldri lauss verða nema hann veiti honum svardaga at koma Iðunni
> út of Ásgarð með epli sín, en Loki vil þat.
>
> Surely they're Idun's apples, aren't they?

Yes. I don't see any problem here. There is nothing ambiguous about the
sentence.

None of these examples sound to me like the abomination you originally
brought up :)

Regards,
Haukur