Hydrogen explosions are badly dangerous. If hydrogen gets mixed with air and catches fire (you have hot parts everywhere), almost always it detonates at huge speed, instead of making a slowes flame like for instance natural gas uses to do. This detonation is much more destructive. With hydrogen it happens over a very wide mix ratio with air.
Carbon monoxide is a much smaller risk of explosion, and usually it doesn't detonate. But it's a bad poison, sure.
hydrogen can reduce iron oxides, but I suppose less efficiently than carbon monoxide does. Reacting with one mole of oxygen atoms produces 275kJ for Fe, 242kJ for H2 (making vapour), 283kJ for CO. All data at 298K.
Maybe someone can estimate the proportion of unreacted hydrogen around 1600°C. I suppose only a fraction makes H2O, the rest must be separated and recycled, but without wasting the heat. Not trivial.
Coal is extremely cheap, even more so than natural gas. Hydrogen from electrolysis has no single chance to compete with it. By the way, hydrogen is produced from methane presently because this is much cheaper. I doubt that hydrogen can replace coal.
Electrolysis of iron ore was my attempt to linger this cost problem, because the path over hydrogen means important additional losses. But even that way, Fe would need as much electricity per mole as aluminium, perhaps with a lower voltage, and with moles twice as heavy. So if aluminium costs 5€/kg to construction companies, much if it resulting from electricity cost, steel obtained by electrolysis would cost 2.5€/kg instead of 1€/kg. Bad. Hydrogen would be worse.
I fully agree that steel production too should go emission-free, just like lime production, transports, electricity production... But it's badly difficult!
Perhaps the cheapest route is to sequester the CO2 produced by the steel plant.
The best hope I have would reduce iron ore using sunheat, in some indirect process involving other metals.
Carbon is removed from pig iron to make any steel. This is such an old process that it has become really cheap.
And yes, some steel demands very low carbon content, but the existing processes are cheap enough that any alternative would have a hard time to compete. They can be as simple as: heat in an electric oven, blast oxygen through the melt.