Seriously corrected at 1:15 PM after unintentional insult to Demosthenes pointed out. See comment.
But, thinking it over, he's not terrible casting. Iron Man isn't so much a superhero as a superheroic feat of engineering. It's the suit, not the man, doing all the physical work. Stark is to Iron Man what the guys at Houston Control are to the Martian landers. He's the remote brains and he doesn't really even need to be inside the armor. In fact, in many story arcs throughout the comic book's history he hasn't been. Somebody else has worn the suit---most often and most successfully, Stark's best friend, Jim Rhodes---or the suit has been on its own. So when you get right down to it, there's no reason that Tony Stark has to look like a superhero.
Stark is kind of frail for a superhero anyway. He has a bad heart---he invented the armor to compensate for that; I forget how that was supposed to have worked---his nervous system's on the fritz. He's been less than a model human being too. He's fallen off the wagon a few times. He's cracked up. He hasn't always remembered that with great power comes great responsibility.
Downey can handle the dissolute, demon-haunted side of Stark, and he can probably look intelligent enough to be plausible as the one guy in the Marvel universe who rivals Reed Richards for brains.
And Stark's slightly older than the other superheroes. Most of the male superheroes are indeterminately early thirtysomething. The women mostly seem to be in their late twenties, except for Wonder Woman who is of course ageless. Stark is decidedly middle-aged, late thirties, maybe even early forties. Not quite as old and graying as Stephen Strange but old enough that he's naturally authoritative with the younger superheroes and when he confronts those whippersnappers he makes them feel as if their tights are bagging.
So, Downey. Why not?
That's good casting.
Rhodes has been the superhero that Tony Stark's not and when he's donned the armor the only reason he hasn't been better at being Iron Man than Iron Man is he lacks the experience and the engineering know-how, skill sets he could learn and is learning. Marvel has even feinted towards replacing Stark with Rhodes permanently.
Next to Downey's Stark, Howard's Rhodes will definitely look more like the real superhero in waiting. I haven't seen any stories revealing the movie's plot so I don't know if Rhodes will be taking over as Iron Man at all. But the more I thought about Howard as Rhodes as Iron Man the more I thought, Why didn't they just cast Howard as Iron Man himself.
However less than a stereotypical superhero Stark is as a character, what he is as drawing is this:
I don't think that even with a goatee, Downey's going to look that good. But Howard?
Howard's already there.
Compare this guy...
...to this guy.
Yeah, yeah. I know why it is. I know why Downey's Stark and Howard's Jim Rhodes.
Tony Stark's a white guy. Rhodes is black.
This has got to stop someday.
If Eartha Kitt and Halle Berry can play Catwoman---Ok, it's stretching it to say Berry played Catwoman. But I blame the script and the ridiculous suit. Berry should have been able to play Catwoman on her head. Kitt, though, was only not the definitive Catwoman because Julie Newmar owned the role at the time. Otherwise, she was purr-fect.---if Kitt and Berry could be Selena Kyle, then Terrence Howard can be Tony Stark. Or Will Smith could be. Or Denzel Washington.
One of these days.
One of these days some little kid who is running around his backyard right now with a towel tied around his neck for a cape will have grown up to be an actor and get cast as his generation's Superman or Batman or Iron Man and no one will notice that in another time he'd have had to hope that Hollywood made a movie version of Black Panther or Green Lantern in order to have a chance to play the superhero instead of the superhero's best friend.
Welcome to those coming over from TBogg's place. Speaking of Julie Newmar and Eartha Kitt, there are a couple of fun YouTube follow-ups to this post you might enjoy. "Catwoman, you are not a nice person" and Purr-fect Eartha.