I realize that tunneling in certain parts of the world is an old, established system of getting through mountains (Norway and northern Italy, for example). But this concept is a recent one for Iceland. Since our visit, the OSHLIDARGONG TUNNEL has been completed (end of September 2010). I find this report fascinating. A map is provided to show the route. (This may take a short while to load, but it is worth the wait.)
HNIFSDALUR. This village is subject to avalanches, just as the coastal road was continuously subject to avalanches, falling rocks (boulders), and icing.