Same. Wife and I went for New Years this year and it was by far one of the most satisfying vacations I've ever taken. Absolutely nothing about the place is overrated, and we lament how little of it we've experienced.
It is as close to magic as anywhere I've been, and their New Year celebration is insanity.
I went up to the hill in the center of Reykjavik for New Years and was astonished, completely astonished by the amount of fireworks that could be seen.
If you can, see if you can get to a bonfire a few hours beforehand. Travel / tourism agencies can arrange this.
Also, if you'd enjoy seeing the Aurora Borealis, know that due to weather, clouds, etc., it isn't very reliable, and it may be best to plan on multiple attempts at it. The experiences we had ranged from disappointing to terrifically amazing, but if we'd only gone the one time, we'd have left without having experienced it.
It is as close to magic as anywhere I've been, and their New Year celebration is insanity.