This is a quote from a useful poultry website... Iron (Fe) High levels of iron, up to 25 mg/L, have not been shown to adversely affect flock performance, but they will stain waterers. High iron levels may encourage the growth of bacteria that can lead to diarrhea. When iron in the ferrous form is exposed to air, it is converted to ferric hydroxide, which gives water the typical rusty color. And here is the website so you can read more information! http://articles.extension.org/pages/68305/water-requirements-of-poultry
We had well water that was very rusty and smelled too. So we had to bring in city water. I wouldn't recommend it.
I give my chickens iron water all the time, and they've been fine. If you have another option I would recommend--my chickens are so picky, that they do not drink as much water because they don't like the taste. If you have some inside water that is filtered more, I would recommend doing that.
