Nitrate does not turn into Phosphate, no matter the concentration.
Nitrate does have long term toxicity to fish, but one major concern is that NO3 acts as a measurable proxy for unmeasurable organic pollutants, sulphates, fish hormones, steroids, etc. This of course fails in a planted tank because the plants are using up NO3, so we feed lightly, stock lightly, and do weekly 50% water changes and "hope" that it is sufficient to keep an equivalant of an unplanted <20ppm NO3.
Hagen's PO4 test kit is fine, yours is apparently deffective, but the product itself is fine. Contact your lfs for an exchange or contact Hagen and inform them.
Iron testing is tricky to say the least. In its chelated form it will be held in the Fe(II) (Fe 2+) form that plants prefer. So if you tested shortly after dosing, you would obtain the correct results. However, this will degrade to Fe2O2 and then spontaneously oxidize to Fe2O3 if there's oxygen present. So, for example, the next day, your kit will be hard pressed to produce accurate results.