Yes.

I have no idea where 10/8 is coming from. Curious that the iPhone seems to get it from my VPN server, while no other client does.

Edit:
I wonder if the use of 10.x.y/24 is somehow confusing for the iPhone. Maybe a bug makes the device only expect 10. to be used as /8 ?
I'll try few changes as you suggested Peter. I don't really care what IP space is used by my VPN setup, provided all is routed correctly.