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If it's kind of puffy as described, it may not be iron on. Likely it is a type of silkscreen where the ink containes a product that causes it to puff up when it is run through high heat (which also dries the ink). If that is the case, then there is no hope of removal.
Iron-on letters can be removed, but will always leave a residue behind. I recently removed iron-on lettering a name from the back of a hockey jersey by heating it back up with an iron, and pealing the letters off. The shirt was not damaged, but I can still read the name written in glue residue. My plan is to replace the name with another name which should essentially cover up the problem well enough to fake it on a hockey jersey. Results may not be good enough for your purposes.
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