This movie makes up for every failing of Watchmen. Whereas the Watchmen concern themselves with petty crimes, Ironman concerns himself with terrorists and the prevention of war.
It's actually pretty realistic in terms of international politics (big stick policy, a far more successful one than appeasement). Tony Stark invents weapons, he sells them to the United States, the United States uses them to kill terrorists, no more terrorism.
Probably the United States might want to take more care with its top scientists/weapons developers though, as Tony Stark gets captured by the terrorists and are forced to build them his most advanced weapon. Sure enough, he does, but in a cave! With a box of scraps! This is where the realism wears off. Tony Stark escapes from the cave with his new suit that is both bulletproof (and apparently tank-proof), has machineguns, flame throwers and rockets, as well as jetpacks. And a core that's supposed to be somehow relevant. These are minor plot flaws however when compared to the unrealism that is Watchmen, where the U.S comes close to nuclear war with the USSR (some history lessons would have helped).
The lack of romance in the story is possibly the single most brilliant stroke of genius that made this film so great. Without the infatuation with women, Tony Stark focuses his energies on creating the most advanced technology for defeating terrorists and defending the freedom and liberties of people everywhere. The few scenes where his love interest was involved, she was helping him in some way or another that was relevant to the plot. The subdued emotions in this movie (unfortunately abandoned when the villain loses his sanity) leaves a nice aftertaste.
This film succeeds in every aspect in which Watchmen failed. The plot is more realistic, the characters are more mature, the action is better and the film is coherent. It is one of the few superhero movies that actually work.