The saggar has a tight seal to prevent carbon monoxide from escaping which both ensures strong reduction and protects the kiln elements but it prevents oxygen , from the atmosphere , from entering so a source of oxygen must be provided. The iron oxide is added to provide a source of oxygen to react with the carbon . Black iron oxide was chosen because, at temperatures around cone 6, it reacts easily with carbon to produce carbon monoxide. Black copper oxide could also be used as an oxygen source but it's more expensive. Black iron oxide is cheap, readily available and comes as a very fine powder.
To protect the saggar, the iron oxide and charcoal are placed on a tile which sits in the base. Residue from the reaction can be easily scraped from the tile so it can be reused and it can be replaced if damaged. The aim was to make the saggar last as long as possible.
Thank you for your responses. Also my complements to Marcia Selsor for your excellent cone 6 copper red glaze!