This is great to read.
I am a permaculturist currently in Kentucky (USA), with plans to move to Iceland in about 3 years.
I've just started researching growing food in that climate. Right away, it seems there must be a wind break, yes. And lots of heat traps - the volcanic rocks you mentioned sound perfect. Sepp Holzer has lots of good information regarding creating heat traps with stone (managing to grow citrus in high elevations of Austria).
I discovered a nice blog last week about a gardener in Iceland. She lives in southern Iceland, but it has been really helpful to me: http://www.gardening-iceland.blogspot.com/
I wish I had more to offer, but I've just started this research myself. I'm drawn to the challenge though -- very much looking forward to it all :]
x- Good luck!