Iiiiiiit was pretty clearly implied to be mercury-based, what with the effects and the way it behaved. Jinora knew that it was metallic because she watched them use the poison on Korra with her projection and stuff. I imagine it was rather difficult to animate/color it in a way that made it look like mercury, and not just random liquid #394, which is why they had Jinora clarify that's what it was.
Also, the iron would behave differently in the bloodstream than it would in a brick. That iron is bonded to things. It is not just tiny chunks of iron floating around. It is effectively not metal anymore when it is in the blood. (Terraem or Torizo might have corrections to make with this, since Terraem is more educated in health sciences, and Tori in biology across the board.) As far as the "how did they know they could bend it", Jinora might have forgotten/not known about the Platinum limitations.
Following the chemical trend of which metals they seem to be able to bend, "base" metals (Iron, tin, copper, etc.), which are more reactive with things in their solid forms, and thus prone to more earthiness, are the metals preferred for bending. Whereas "noble" metals (platinum, presumably gold, and to a much lesser extent, silver) are less reactive in their solid state, making them less earthy, more "pure", and a much greater obstacle to bend. Mercury in its quicksilver form would usually fall into the second category, although mercury is a component in many other minerals in nature. So we can't say for sure on that.
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