If you use it the way I want you to do, you end up depositing calcium carbonate dust (like pool plaster dust) on the filter. In addition, you are chlorinating in an alkaline (high pH ) solution, via the cal hypo.

+ Chlorine + high pH tends to convert the iron from a soluble form, to an insoluble form.
+ The calcium dust gives it an attractive place to 'land'.
+ When you backwash, you can remove the stained calcium dust, getting both the dust AND the iron out of your pool.

Using the cal hypo this way, you MUST let your pH, TA, and CH 'float'. The result will be water that is slightly over-saturated in calcium -- but that's good in this situation. Your individual CH level may go up slightly, OR it may come down a bit.

You'll need to continue doing this till all the iron is out of the pool.

By the way, this should not be much more expensive than using bleach. 1 gallon of bleach is roughly equivalent to 1 pound of cal hypo, in chlorine content.

You seem to be missing something regarding the effect of the sequestering agents: their effect is TEMPORARY. Until you remove the iron from your pool, you STILL have a problem. A sequestering agent simply hides the problem for awhile.

The COMPLETE process for dealing with stains is this:

1. De-chlorinate so a metal dissolving agent can be used (ascorbic acid, citric acid (Not recommended), sodium hydrosulfite, etc)
2. Add polyquat 60 so the pool doesn't turn green during treatment.
3. Add the dissolving agent (ascorbic acid, etc.)
4. Immediately add HEDP to KEEP the dissolved metals in the water.
5. Re-chlorinate gradually.
6. REMOVE the metals from the water via CuLator (ion exchange) or enhanced filtration (cal hypo, alum coating, etc.)

Another option is to DRAIN the pool after step #3, and refill with metal free water.