Standard procedure for all twins is "nearest suitable airport"
If you're in a twin, and an engine quits (especially over a remote area like the Arctic), you set a direct course for the nearest suitable airport for your aircraft. Issues like passenger comfort and availability of flights to rebook people are close to the bottom of the pilot's list in such a situation, as you've lost enough redundancy that continuing the flight is no longer an option (the next engine failure turns you into a glider).
Iqaluit-the-airport isn't as remote as you make it out to be
While the countryside surrounding Iqaluit and its airport is quite barren and rugged, largely isolating the city, the city itself is well-stocked with services for its size -- it is the territorial capital of Nunavut, after all. It has a full hospital, fire and rescue services (in addition to the ARFF at the airport), and most of the other trappings of a reasonable city (it hosted the G7 finance meeting back in 2010). In addition, most of the folks there speak English, and the city has a good track record in past diversion events.
The airport itself is also well-equipped -- it has a full air carrier runway complete with an ILS approach, ARFF services of its own, and scheduled air carrier service to Montreal, Ottawa, and Yellowknife as well as other destinations in the Canadian Arctic. There's also a reasonably sized terminal building there, and full-time Customs staffing there that could slowly handle the passengers from such a diversion if the stranding extended for days.
Transpolar operators plan for this stuff
Operators who fly over the Arctic are required to have contingency plans for exactly this type of event. Such planning includes being able to send a replacement plane in a timely fashion to pick up the passengers, having the ability to get parts out to the airplane-on-ground (AOG), and being able to perform maintenance in such a location or ferry the aircraft out if need be. Coordination of rescue services (including cold weather exposure suits for crew), the ability to communicate with ATC and airline dispatchers, radiation concerns due to solar flares, and the ability to navigate where magnetic compasses are no good are all included as well.