Damage Reduction Gear and Iron Maiden

[Chameleon]

The answer to your question is yes, the damage is reduced. See reference at Click.

4.1 Damage Modification Effects
There is a well-defined order in which the damage modification effects are applied to the damage:
1. XvX
2. Energy Shield
3. Bone Armor and Cyclone Armor
4. DR and MDR
5. Resistances
6. % Absorb
7. Direct Absorb

In each of these phases, damage cannot be reduced below zero. The result is what I call Damage Taken.

4.2 Special effects
There are some special effects that take place before damage resolution: Thorns, Iron Maiden, Spirit of the Barbs, and Vulpine items (X% Damage Goes To Mana). They all use the physical damage after all damage modification effects, i.e. Physical Damage Taken, as their source damage. For example, Vulpine items add X / 100 x Physical Damage Taken mana to the defender's mana pool in the damage resolution.

Good Hunting M'Lady.