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Going by the v1.0 timeline, even if the first war against Iraq didn't happen, the Iowas might still have been around by the time the Twilight War began in '96. Since in the v1.0 timeline, the Cold War never ended, the USN had reason to keep the Iowas around.
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+1. The BBs got recommissioned as part of the Reagan-era build up, so even without the '91 Gulf War they'd have been on the books and in the ver 1.0 alternate history the unrest in the Middle East before the Sino-Soviet war kicked off would have provided ample employment opportunities for them.
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I can see an Iowa class supporting amphibious/ground operations in Scandinavia. I can also see it getting caught up in one or two of the fleet battles in the Norwegian/North Sea.
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The Norwegian front is probably the best venue in the European theater for a battleship to make a contribution as a fire support asset, at least until the fighting moves into Finland. Given the road network in Norway any Soviet attempt to move south would provide lots of serious targets for 16" naval gunfire as long as the NATO side of the naval fight could maintain enough superiority to keep ships in close to the land front.