Avoid aromatic woods like cedar. Pine is cheapest, but it needs to be sealed (well any wood really) with something like non-toxic paint/polyurethane. You need to let all the fumes dissipate. Turn on the heat and lights for a few days also to make sure it is all cured before the iguana is put in. I like oak, but it cost a fortune. Yellow poplar is a cheaper alternative.
OK, I was planing on sealing it, but how many coats should I use, and what kind of sealer? since I'm building the cage now I also have couple more questions : Should I insulate it, so it stays warm? Will one side screen be too open, and not hold in enough humidity? I'm building it in a closet, how long do you think a 4' long x 2' deep x 6.5' height enclosure would last an Iguana. Sorry for so many questions, I'm learning about them now, so I can give my future Iggy a good life.
I use 3 thin coats of clear polyurathane. If you live in an area like the northern U.S., insulation will help keep in the heat. If you live in warm climate like florida you can have a more open cage. It gets cold in the winter here, so we use solid wall cages with vents high on one side and low on the other. Some air vents through the openings on the top for dome fixtures. Your cage would be ok for a juvenile iguana for a while, but will not be long enough or deep enough to house an adult iguana full time. It is tall enough though.
Anything water-based is fine to use as sealers. Once you let it dry you should go one step further and set all the lights in it to allow for a "curing" time. Often what happens is that the heat of the lights bring out the fumes again so doing this before it's tenant moves in just makes sense...:-)