I realize that keeping on this guy's good side is in your best interest, and so is the well being of the iguana. Why does this guy have an iguana, and why does he want to "release" it?
My suggestion is to be honest about the position he's putting you into and tell him that the most ethical thing for you to do is report the release to your local animal bi-law agent. I'm sure this an act of cruelty that they can deal with, and/or it most likely is illegal to release non-native fauna.
In any case the mention of such action by you reiterates the seriousness of his proposol and may make him think otherwise.
I've used this approach in the vet clinic I work at and it has never come to the point of me actually having to go through with the complaint.

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