I'm not sure about the practicality for any particular application, though a couple considerations come to mind which may influence the design choice.
First, the attraction between the assemblies may produce a significantly large axial forces compared to a nonferrous rotor. This may require some design to make sure the forces are balanced in the yoke, or extra bearing support if the forces are left imbalanced.
Second, the higher permeability of the iron alloy means that the flux paths are going to be very different within the rotor volume if the material is changed independent of all other factors. Depending on the rotor thickness and pole orientation, this may result in a change in the relative orientation between the magnetic field in the material and the conductor (rotor) velocity. This isn't necessarily a drawback; I just think it's worth emphasizing that the geometry of the design is dependent on the material permeability, so what works for nonferrous rotors may not be optimal for a ferrous rotor.
Consider the simplified example of a thin disk with a horseshoe magnet applied to one face with its poles oriented along a chord of the disk (for demonstrative purposes). In the case of an aluminum disk, the field lines will be mostly axial (through the thickness); for iron, the field lines will be mostly tangential (along the chord). In this example, a design which works well with aluminum will produce negligible braking with iron.
That said, there is an advantage that comes to mind. The higher permeability means that the rotor contributes less overall reluctance. For a given magnet, more total flux is induced. This may be a significant when the path length through the rotor is large (e.g. axial magnetization with a thick rotor).
I'm sure there are lots of things I'm missing, but I'm as rusty as that rotor.