Hi Don -- I am not sure on the dates of the mountain road closings, but I suspect it is earlier than October. It really depends on snow in the highlands, which can come even in late August. I can call the road administration tomorrow, and they will probably be able to tell me when they usually close. Certain roads will surely close sooner than others. There is an English version of the road condition website, which shows the exact condition of all the major roads in Iceland.
http://www.vegagerdin.is/english/road-conditions-and-weather/
A trip in the fall might be wonderful -- I love the fall here. But you need to be aware that the weather might be very different than in the summer. A lot depends on when your are thinking about. The early part of the fall (from late August to early October) is usually pretty nice, and I think unless you get unlucky, the weather should not be a barrier. It will be cold (30s-50s), but you have lots of light in the day, and a real night in the evening. You might be able to catch the aurora in late September and early October. The key is to be flexible -- there is no counting on the weather here, so you might get beautiful clear days in the 50s, or you might get wind, rain and snow. The earlier in the fall you go, the more likely you are to have good conditions. I think it is harder to go wrong in September.
This is the view out my window for Reykjavik's first snow last fall -- October 3rd:
Later in the fall and during the winter, severe wind and storms can be a problem. It is not that unusual for the wind to be over 50mph. During one winter storm last year, the wind gusted at 135mph just north of Reykjavik, blowing the roofs off of some houses. Winter here can also be beautiful (especially if it is clear, with snow on the ground and the aurora overhead), but the weather can be miserable at times. At its worst, it is dark, the wind is blowing a gale, and the precipitation goes from rain to sleet to snow to sleet to rain all in one day.
But for all its difficulties, the fall and winter can be great -- there are dramatically fewer tourists, so you will have most of the more crowded tourist attractions to yourselves, and mostly Icelanders will be around. You get the benefit of a real day AND a real night, everything is cheaper...summer hotel and car rental rates are often double what they are in the fall and winter, and I think you get to see more of the real Iceland. Iceland not as a tourist destination, but as a real country with real people living on it.
