Burning a minecart on Alloy Furnace gives you 5 Iron
but with railcraft you can make 2 minecarts with 5 steel.
so:
5 iron -> 5 steel -> 2 minecarts -> 10 Iron

I know there is a "blacklist" for alloy furnace on the configs(no idea how to use it), but no option for returning 5 steel

Personally, I would leave the iron alone. It shouldn't be up to a mod to balance interaction with other mods like this. As far as bronze minecrafts go, as a player or packmaker, use a recipe tweaker to disable that if you so choose.

Perhaps you could make it so there is a slight downfall to smelting the Minecart, like making it produce maybe 4 iron instead of 5?

Note to self, don't reply to issues when you should be sleeping.

Not a bad idea, maybe even with a chance, Like, you'll have 80% chance to get all the materials back.
If it's made up of more than 1 ingot, it'll be 80% of the number of ingots(giving a minecart only 4 ingots)
If it's made up of 1 ingot, there's an 80% chance to get said ingot back. OR, if nuggets exist, make it return nuggets

While you do end up getting more iron than you started none of the steps in this process are 'free'. Steel creation is generally a reasonably expensive/time consuming process. I'm not convinced this is a huge issue, though I'll welcome other input on it.

Well, you can also transmute bronze to iron, since you can make carts out of bronze

edit: (also, your mod is awesome)

Oopsie.. Translated it!

I don't really see the issue. Like mentioned, steel is time consuming to make. I think it's easier to go down mining and grab some iron ore. That said, if you still think it's an issue, use the blacklist. Committing some documentation on the config option now.