My advice is to never, never, ever iron your knitting. And by that, I mean putting the iron in contact with your stitches. It will flatten the stitches and perhaps damage the yarn.
However, I have used the steam setting on my iron, held the iron above the knitting and steamed it that way. Usually with a cloth to protect the yarn.
There are several ways to finish the knitting process, and blocking, steaming and others exist because different fibers need different care. You can imagine the state of an ironed scarf made with an eyelash yarn!
As to no-stretch ponchos and the like, I think the stitches used, the tightness of those stitches and the fibers used are the brew that determines how stable the garment is.