Low-melt wire encased in iron doesn't sound like a good idea. I can think of two things wrong with it:
1). A fuse is designed to melt if the wire gets too hot. If the wire is mounted in iron, the heat from the wire will just soak away into the iron, and the fuse-wire will never get hot. So this fuse would not do its job and protect you or your circuit.
2). Iron is a pretty good conductor of electricity too. So if the fuse wire is mounted in iron, then touching the iron is almost the same thing as touching the fuse-wire. This design would be very dangerous, and you'd have to encase the iron in something ELSE ... like maybe glass or ceramic ... to prevent people from touching the iron.
