High levels of iron do cause problems to fish. Some fish are more tolerant than others, but they all suffer to some degree. You should get the water tested for iron to see exactly how much is in there. Most iron test kits recommend having 1ppm or 0.1ppm of iron, can't remember which one, but if you check the directions in an iron test kit it should tell you what to keep the iron level at for good plant growth. This level will not affect the fish. Then if your iron level is close to this just use the water the way it is.
If the iron level is significantly higher then filter it through carbon first and then use it. Activated carbon works better than normal carbon and should strip the iron out of the water pretty quickly.
The other option is to have the water in a pond or spare aquarium that is full of floating plants. The plants will use the iron up and drop the levels quite quickly. Then you harvest the plants and use the water.
Having live plants in the tank and using carbon in the filter would be the simplest way to go. Just replace the carbon at each water change.