Hi J.,
I think you have two separate issues here but I don't think the bottle/milk issue is related to the sleeping one.
But I do have advise for both :)
I think the sleeping issue you are having is probably his molars coming in. My son is 2 1/2 and his came in right around his 2nd b-day and he definitely had some bad nights from them. I'm not sure what is still OK to give toddlers as of these latest recalls, but find either baby motrin or tylenol and give him some of that before bedtime. (Motrin works longer--up to 8 hours, so that would be the preferable one).
When and if he wakes up--don't go in there right away just wait at least 15 min and see if he can get himself back to sleep. If he works himself up more, and its time for another dose, then go in there, calm him down so he can take some meds, then put him back down. If you run in there every time right away he will get used to not just waking up but you coming in there, and the cycle will continue. But of course, you don't want him hurting either--so go in there if you think he needs some pain medication, but try and stay out and let him work it out on his own if he's just waking up and wanting mommy.
Now your bottle issue. He would have to be drinking soooo much milk to have an iron problem, but since you think he is, I would say you definitely have a milk/bottle issue that you need to address as soon as possible. And really it's all up to YOU. He is TWO and probably very strong-willed, you are the parent/adult and need to stay strong with this (and all) of your decisions.
Take that bottle away and don't look back. It will only get harder. Throw them away so you are not temped to give him another. And then stick your ground. This will be the first of many off battle of wills with your toddler and you need to set a precedent now or you will only continue to give into his pleas and it will get worse with everything. Jut because he is screaming for something doesn't mean he needs it or it is even good for him--so stay strong--you can do it!!!
By giving him mixed signals, saying you are doing something and then giving in, you are only teaching him that screaming and whining for something does work...and that is something you don't want to encourage since there is plenty of that from toddlers without the positive reinforcement!
Good luck! I hope you find some sleep soon!