The church in Vik was a really nice little touch of human presence with a dramatic background. Reykjavik is in a pretty boring area of Iceland, it would be tough to find a good way to represent it that would create a really inspiring image. You don't even find many great photos of Reykjavik IMO.
I get the sense from this and other threads that people feel the rules might be pretty strict, but in my interpretation (keeping in mind I'm not officiating the contest and didn't write the rules
), it's pretty wide open. As long as *you* feel you are representing Iceland as a country and a place of natural wonder in a good, evocative way, then it doesn't matter much if you're using houses or not, animal models or plant models or not, whether you're using a real DEM terrain or one you made up, or even whether the position of the sun is plausible for a given time of year (snow on the ground with sun on a DEM terrain coming from the North for example). Maybe my interpretation is too loose, but I think what should matter is whether an average viewer looking at your image automatically thinks "Iceland" or not.