iw
comes from Iwrit or Iwrith, a somewhat-archaic German borrowing of עברית (the more common German term nowadays, in my experience, is Hebräische). In the 1989 revisions, two of the changes involved replacing codes based on German names with codes based on English ones: Yiddish changed from ji
to yi
, and Hebrew from iw
to he
.
The earlier ones presumably came from some older standard from a German-speaking place, but despite the "I" in "ISO", these standards are primarily influenced by English-speakers; if a language doesn't use the Latin alphabet and has a widely-recognized English exonym, the code will often be based on that. For example, the code cr
comes from English "Cree" rather than ᓀᐦᐃᔭᐍᐏᐣ (Nehiyawewin) or its local variants, and ja
comes from English "Japanese" rather than にほんご (Nihongo). I have no sources for the motivation, but I imagine they decided to regularize things by requiring the codes to be based on either native endonyms or English exonyms/transcriptions, not German ones.
I can't see any reason why iw
would be insulting or offensive; it comes from a transcription of עברית, which is the usual name in Modern Hebrew. It's just no longer standard.
iw
, very interesting! So, definitely,iw
is not offensive in any aspect, right?