That's how the trope came about, yes, but not how the trope is used in fiction and games now. If you're going with the RPG approach of "let's steal this thing from folklore and formalize it to make it recognizable and memorable for new players and allow GMs to crib from related folklore for their games" like D&D did and the OP of this thread is doing, or the masquerade-style sci-fi/fantasy approach of "supernatural stuff has secretly survived into the modern day and the 'myths' and 'fairy tales' about them are actually true and useful for monster-hunters" like Buffy the Vampire Slayer, the Dresden Files, Stargate, and so forth, starting with the "fossilized" modern version and expounding upon it is the preferred approach. Hence why I followed up that sentence with examples of what various authors and designers do with the concept in current fiction, not examples of how steel would have been viewed in comparison to iron by the originators of those myths.
It's the same reason D&D has two different monster races called Medusas and Gorgons when Medusa was the name of a single gorgon rather than a whole species and gorgons were depicted in many different ways none of which resemble the D&D variety, why all the Goa'uld in Stargate resembling Egyptian gods use the Greek versions of their names (Apophis instead of Aapep, Anubis instead of Anapa, Seth instead of Suetekh, Thoth instead of Djehuty, and so forth) even though the Goa'uld supposedly left the Earth long before the Greeks discovered Egypt, why in the Dresden Files Mab the Winter Queen and Maeve the Winter Lady are two separate characters even though those are just two names for the same mythological being, and so forth.