I like the idea of carrying tincture of Iodine. It's dual use. You can use it for first aid as well as a water treatment. However, at eight drops per quart x number of quarts you want to treat, I think you get more bang for the volume with porta aqua tablets. It would be okay for a larger kit, though.
Another thing is that you need to carry it in a brown glass container. The color doesn't matter so much, but Iodine is light sensitive and clear glass would not be a good idea. I would also wrap some duct tape around the container to protect the glass from shock. It has been discussed on this great site that you need to carry the porta aqua tablets in a glass container to preserve the tablets and the other contents of your kit! Same goes for tincture of Iodine. I first encountered this long ago building small survival kits. I included the newer plastic off the shelf container of tincture of Iodine in my kit. But in the kit I built for my wife, I had used a brown glass container of it. I began to notice that various metal things in my kit would rapidly corrode. My wife never had the problem, and I figured out the hard way that it was the Iodine. It doesn't come in glass containers anymore, but you can repackage it. One more thing to think about is how to measure out the eight drops. I had tried a plastic cap with an integral eye dropper. The Iodine attacked the rubber. Carrying a dropper separately increases the volume for a small kit. The smallest dropper I've found is from those small glass coffee flavorings in the gourmet coffe stores. As for me, I just carry the tablets.

cheers,
Mike