I've run my airbrush off a CO2 tank since April of 1988 without an issue. A frat house at the university I was attending at the time got into trouble over serving alcohol to minors and they didn't require a wet bar, so I have them $10 for the tank and invested another $20 for a regulator at a welding shop. She's run like a dream ever since and still wears a Theta Chi sticker.
It has never gotten cold enough to freeze anything, never presented any danger, and it is quieter than most "silent" compressors. The added advantage is that CO2 is anhydrous, meaning that water never gets into the line and there's no need for traps and filters. That saves cash, which is far from stupid.
The only real disadvantage is that once or twice a year, I have to go get it refilled at the welding shop, but the local Coca-Cola bottling plant has also filled it for me. Inexpensive, but a little heavy and awkward to carry around.
Check Harbor Freight for a regulator that won't break the budget. Set-up was easy enough, just be careful of your fitting sizes and invest in a roll of teflon tape. Mix a little dish soap with water and slop it on the fittings to verify that everything is tight and you're good to go. I use Badger airbrushes, so I won't comment on how things work out with an Iwata, but it should be pretty much the same process.
I'm in Montana where winter reigns most of the year - but I still paint without a problem, even in an apartment. My neighbors appreciate the lack of noise and vibrations from a compressor, so I can airbrush at three in the morning without complaints thanks to the CO2.