The evidence that grinding steel produces iron-rich microspheres is pretty obvious. You can see the microspheres coming from the grinding surfaces, usually in great numbers. You can see them from a distance. They are clearly visible in almost any photograph of grinding metal.
The reason they are so easy to see is that they react with air and self-heat to high temperatures (yes, temperatures high enough to melt them), causing them to incandesce for a short period. Of course, during that interval most people don't call them "iron-rich microspheres," they call them "sparks."
When they cool down, they don't disappear, they just get much harder to see. They usually end up on the shop floor near the grinder, where they pile up over time. In a building under construction they would pile up on whatever surfaces were underneath at the time, and in any available crevice.
Iron-rich microspheres are also produced from wood flames. The source is ferritin protein complexes within the wood, containing ferrihydrate molecules that condense exothermically into droplets within the hot reducing environment of the flame. At no point is the melting of bulk iron required. (Iron microspheres in coal ash probably come from the same process.)
Burn some wood, stir a strong magnet through the ashes, look at the magnet through a microscope and tell me what you find.
Respectfully,
Myriad