If you, indeed, have bacterial iron, then a chlorination/dechlorination system is the most effective.

That consists of a solution tank (usually about 15 gal.), A feed pump and injector point, a retention tank with in-line mixer follwed by a backwashing carbon filter.
Some may put a sediment between the retention tank and carbon filter.

This will cause a couple of postive benefits. It will sanitize the water and remove additional iron that the feed water may be containing. It will also improve, taste, odor and clarity of the water. The carbon will remove/reduce a host of VOCs, organics, and other elements.

Your cost, depending on the quality of the system, will be between $1300 and $2700.

If you use household bleach, a standard diaphram pump will do, if you use hydrogen peroxide, the you will need a paristaltic pump. The retention should allow for 20+ minutes in most cases.

The maintenance is very low and periodic carbon rebedding will required.

Since you have water from a town, chances are it is already chlorinated. Found out what ranges the free-chlorine is and adjust the system accordingly. You should be getting 1.5ppm chlorine or more.

It seems as though the town is not doing something right if you have municipal water and still getting iron bacteria. So make sure that's what the problem is.

Thanks, Andy. Your reply was very helpful -- clear and easy to understand.

I called the town water department, and it turns out that they are about to make some improvements that may help with my problem. (I knew about the improvements, but I thought they that had been implemented a few months ago.) They offered to send someone to my house to take water samples, which they'll test for iron-reducing bacteria (something that's not mentioned in the annual water report), among other things. My water is definitely chlorinated and I will also find out what the free chlorine range.

After talking to them, I decided to wait to see the test results and to see whether the water treatment improvements will eliminate (or at least, minimize) my problem before doing anything.

I have one question about your message. What is the difference between a diaphram and peristaltic pump?

Thanks!