Topdressing with compost will be perfectly fine.

You can sprinkle your iris rhizomes with Seven Dust to keep the bores from eatting them up. Works wonderfully!!!

Top dressing isn't a good idea for bearded irises. The tops of the rhizomes need to be able to breath and should be left exposed to the elements.

I agree it's not a good idea to cover the rhizomes of beardeds. Especially as you've had rot.

It's probably not too late in your zone to feed them with a granular low nitrogen fertilizer, like 4-8-8. Next time you reset them, dig in the compost.

Compost or top dressing will not do anything for the borers. In fact you will be giving them more places to hide their eggs! The idea is to clear off as much from the top of the iris as possible to get rid of the eggs, either in Fall (after egg laying) or Spring (before hatching). I would feed the iris asap with some liquid plant fertilizer if the soil is not good.
Laetitia