I have a different take. Romney is outspending everyone, what, 35 to 1, I heard, and he still can't win Iowa? He'll probably go on to win NH, but if he doesn't make a strong showing there, he's still going to look bad. Then it's on to SC and Florida. If Romney can't buy Iowa, he for darn sure can't buy SC and Florida. And Paul sure won't.
Fair point on Romney. He has trouble cracking 30 no matter how much he spends for good reason. He probably wins NH and has trouble in SC and FL under just about any circumstance for the very reason you give.
That said, I think a Paul win in Iowa is the one thing that will freak out enough people to get them to hold their noses and vote Romney out of shear panic. In that sense, a Paul win in Iowa would be better for Romney than if Romney won Iowa.