Hokay - you might regret you asked. :) So - I did some research about healing wounds out of curiosity, and the rules actually seem to say (counter to what I had believed) that there is no reason why Heatherbalm cannot be used to heal wounds caused by Iron. When you are wounded by iron, the wound: A) causes mortal and chimerical health level damage simultaneously B) the damage is considered 'aggravated' and follows said rules, and C) you lose one point of temp glamour per health level inflicted.
BUT, there is nothing that says that this damage, once inflicted, could not be healed normally. The only caveat is that as it is aggravated damage, you need to spend glamour to heal it with Heather Balm. So, if the wounds were fresh when he was rescued and heatherbalmed originally, it should have healed all damage.
I'm not saying to try to retcon anything (I hate that!). Just tossing it out. If he had already healed (naturally or otherwise - I kinda love the idea of torturers healing a victim to keep torturing further!!) some of the damage before he was rescued, Heatherbalm would just finish the job in healing the remaining wounds, but would not fix, say, healed scars and the like from earlier in my mind.
Getting to the crux of the matter - if he had surgery to heal the parts that healed incorrectly / nerve damage from earlier, then yes, I'd say that Heatherbalm could THEN certainly heal the wounds that this caused and leave him healthy and whole. There would still be physical therapy I'd think to re-build up the atrophied muscle and to re-acquaint his hands with working as they should after several months of working around the crippling. Well, there's my 12 bucks (because I never just give two cents.)