thanks for clarification , I was nicely surprised to see the map and the list of tourist attractions + speedlimits

I can confirm Suðurstrandarvegur (427) is paved and on Waze has 90km/h.

A "promotion" of "Suðurstrandarvegur (427)" in Minor is possible, but I want to study a rule for the country and not only for this situation.

I'm thinking to change all primary roads (3 numbers) as minor (2 numbers) when the complete track is paved and leave in primary when or more segments are gravel.

Give me a few days to study this rule.

I hope to have a feedback at end of your trip... and a lot of photos on natural features

The map is completely finished with exception of house numbers where is necessary to have local editors, but I hope they will join the community in future.

About your question, I done a few test and I think the problem is a bug on routing calculation.

If you move the start point a bit more close but always on "Eyrarbakkavegur (34)" you have the:
correct route

always on "Eyrarbakkavegur (34)" but a bit more far the 1st choice is not the best (longer and slower): wrong route - wrong route again

and if you change only of a few meters: lost the best route

I changed the priority on "Suðurstrandarvegur (427)", we'll see the effect in next update.

I hope Waze will help you to have a great trip in Iceland and if you need help send me a PM.