Interrail is a great way to travel around Scandinavia. You get to see more than if you fly around, the trains are of a high quality, and announcements are often in English as well as the local language. A further advantage is that you travel city centre to city centre so you will avoid airport transfers which can be costly.
The Interrail pass is available only to European citizens or those who have lived in Europe for at least six months. Interrail passes are available for all age groups, not just the under 26s. Children get a 50% discount and 12-25 year olds also get a discount though.
For more information, have a look at these links to an overview of train services, and the terms of the interrail passes
(Iceland doesn't have any passenger trains.)