The more heat that stays in the combustion chamber during burn the more HP you make. An Iron head absorbs less heat than aluminum so they make more HP (all things being equal). Aluminum heads actually REQUIRE more compression than iron because of the amount of heat they transfer out of the combustion chamber. You may not believe it but it's just plain physics. Heat is energy, the more heat that is in the CC the more power you make (until you get preignition). You make the most HP just before parts start to melt.
Why do so many aftermarket places use aluminum? Not exactly positive but I have some non scientific guesses.
1) The cost of the raw materials is small compared to other factors of manufacturing when dealing with relatively small production runs.
I would guess the cost of getting going on a new head would be very large and the cost of the raw material is small in comparison. When dealing with mass production just the opposite would be true as the initial start up costs would be amortized over a huge amount of heads but the cost of raw materials would be added to the bottom line with each head produced. The difference in cost between a set of aluminum heads and a good aftermarket iron head is only a couple hundred $$, if even.
2) Less weight.
When putting a new race motor together you can pretty much select whatever compression you want so aluminum or iron really makes no difference. If you run aluminum just bump up the compression a point or two. But there is no denying the at least 50 lbs you will save. When it comes to racing, you take every advantage you can.
3) Because aluminum is used almost exclusively in race motors (except where class rules prohibits them) they must be better, right.
I think this mentality has lead to the fact that people are willing to pay more for aluminum, or more correctly, not willing to pay as much for iron. Because of this there is not much money to be made making iron performance heads with the exception of guys that must run them.
4) Aluminum is easier to machine.
Again in limited production I think this can really make a big difference in cost.
I personally run aluminum on the 289 in my '68 Fairlane. There was no way I was going to pay $900 for iron when I could get aluminum for $1100. Plus I bought AFR which come CNC ported right out of the box. Just bolt on and go.
If there was a choice of aluminum for the 4.0L it would be a tough choice. There would likely be a huge weight reduction with the aluminum but the rock solid dependability of the iron would be hard to pass up. If the heads were otherwise identical I think I would have to save the $$$ and go aluminum.
There you have it.
B-loose