Sounds like they eating the old dead iris rhizome and not the healthy newer ones. Harmless? Maybe.

If all the rhizomes are hard I wouldn't relocate them. If the critters are damaging existing healthy rhizomes they will become soft as infection sets in. I'd keep a close eye on what's going on.

If I decided to move them I'd do it soon after bloom. As to what to plant in that area -- your choice!

They maybe iris borers?

Thanks Iris_Gal and Kousa for your opinions and ideas. I didn't think borers were supposed to be active this early in the season, but something sure is munching on them. I'll keep the DE at hand and then do the transplanting after bloom. Never a dull day in the garden, is there? :-)

I would remove the hollowed out rhizomes that are hosting ickky things, because the ickies will only mature & lay eggs & then all the younger irises will be full of the next generation. And I would put the removed ones in a plastic bag in the trash, not the compost.

They sound like iris borers.