There’s definitely a lot of connecting traffic. But KEF is a rapidly growing 0&D market too. Cargo (fish) is a big economic driver as well. Delta doesn’t have the connecting market which might be a deal breaker, but it does have a much better US feed for the 0&D traffic than WOW.
Though I think the loss of Wow might hurt O and D traffic to Iceland. Iceland (other than cargo) is almost entirely composed of leisure travelers. And leisure travelers are much more sensitive to price, which Wow helped to bring down.
I think with 737 Max's and A321LR's able to easily cross the Atlantic ocean, some of the connecting traffic through Iceland will be affected. It won't totally go away, there are certainly markets too small to have a direct flight from BOS to Europe. However those markets also tend to be too small to have a flight directly to Iceland, unless they're in Scandinavia (which Iceland has close ties too).
So basically Norwegian is killing off the connecting market for Iceland carriers by offering cheap non stop flights to places like Paris, London, Dublin, etc. There will likely still be a connecting market to places like Oslo or Stockholm, but it's not huge.