Agreed, although that wouldn't be the first time we've been fed false information to cover up for something.
Visually, certainly. In-game, the army does have iron weaponry but when you find the rusted sword of a dead Arenfield guard in front of the mine, it's made of copper. That said, we know Giron isn't giving them much coin and that they're underequipped as well as understaffed. If anything, it's probably a big reason why they got killed by those ironclad brigands (2 dead brigands for 5 guards).
My guess is that the world did complete the transition into the Middle Ages, but not that long ago. That's evidenced by iron being more or less widely weaponised + full armours. At the same time poorer or more remote regions cannot afford the pricier iron so they make do with lesser quality metal. Also, not to forget that orcs are using copper weapons (impressive that they can actually fight back against ironclad men) so part of the world might still be experiencing the Bronze Age collapse... which is a bit of a historical oddity but hey. It's a porn fantasy game with orcs, elves and dwarves. I can accept a few oddities.
Giron is not saveing on his personal guard and the previous members of the arenfield guards were military men.
The Goblins don't posess Iron weapons though as it seems, so it's possible that the found weapon was theirs.
Lyvias men were only a militia which was suprised by a sneak attack of the Brigands, that aside as you mentioned before several members of the guards had previously died in an attempt to reclaim the Iron mine and Lyvia keeps complaining about her mens lack of training... also the Brigands are wearing Leather/Fur armor and the helmet might aswell be made out of copper.
Finally I can't recall haveing seen any corpses of the Brigands in the Camp until MC kills the 2 Scouts left behind in case someone came to check on the Camp again (maybe they recovered their dead comrades before).
Iron was hardly used for anything in the households, sure nobles had metal tableware and maybe tubs, but commoners had clay or wood for most daily necesarries... Tia actually owns a metal cup.
Given the established kingdoms and the game lore so far it's safe to assume that humanity had reached this stand of social and craftmenship development for quiet awhile.
I'd agree that Deserteurs, Bandits, Thieves, Merchants and Villagers are unlikely able to afford Iron equipment but since John is capeable of forging Iron equipment he atleast must have had a stable customer to stay in business, the reason he stopped forging with Iron was the lack material since the mine got taken over afterall.
Orcs didn't stand a chance against human armies, until they redirected their attention against each other leaving the hinterlands unprotected, that aside atleast those unique Orcs seem to use Iron or even steel weapons, as I doubt you'd manage to forge weapons from copper into those forms and maintain them... it's not clear weather the found copper weapons on higher Orcs are theirs or just in their posession (Orc Scouts and maybe brutes probably had to make duo with what little they had afterall they were considered Outcasts in Orc society).