Magneto the Telepath?
Anyone who knows anything about biology can immediately see that Magneto's technique of mind/body control, which he uses in various early issues, Vision and Scarlet Witch I #4, Fatal Attractions, etc., cannot possibly be what he explains it as-- "controlling the iron in the blood". Even if the iron in the bloodstream could be manipulated magnetically (which, given how little iron there is, is highly unlikely), all Magneto could do by manipulating it magnetically is cause blood vessels to rupture, thus causing strokes. Brain events (such as the ability to control one's powers, the ability to lie, etc.) are mediated by neurotransmitters, which cause bioelectric activity in the nervous system. They are not caused by the flow of blood through the brain. Yet Magneto clearly does this. So how?
The fact that "bioelectricity" governs brain events may lead one to believe Magneto is doing this by controlling bioelectricity. In fact, however, bioelectricity involves very, very tiny voltages, mediated by the flow of sodium and potassium ions, neither of which is particularly magnetic. Again, Magneto should be able to stop a heart with bioelectric control, but not something as subtle as reversing brainwashing or paralyzing people's powers. So how does he do it?
Well, we know he can mess with the molecular level without serious strain (manufacturing a comb for Janet Van Dyne out of thin air by pulling together molecular iron particles in the atmosphere, of which there would by necessity have to be damned few, in Secret Wars-- sure it took concentration, but Magneto isn't going to hurt himself making a comb to impress his bedmate.) But that's still kind of thin.
Perhaps it is an emergent property of latent psionic ability.
Is Magneto A Psi?
There is some evidence that Magneto is a low-order or latent psi. In Secret Wars, Xavier mentally links with Magneto to tap into his latent telepathy in order to have the power to reach Galactus. Magneto is consistently able to use Cerebro, which generally only telepaths can; he has mentally contacted telepaths from a distance (ie, Rachel Summers in UXM #195); he has entered the Astral Plane under his own power. He's also used these mind-control abilities, which may or may not have anything to do with his magnetic powers. On the other hand, he's never shown any actual ability to read minds.
Everything except the Secret Wars reference could be explained as extremely low-level telepathy, plus bioelectric control. However, bioelectric control at the level he'd need would be so sophisticated and subtle, it really isn't plausible for Magneto. And the Secret Wars reference implies that Magneto has considerable power, but can't access it without working with another telepath. That, plus Magneto's mental shields, make me think that he is actually genetically a fairly powerful telepath-- perhaps on the order of Jean Grey-- but that he is effectively fairly pathetic as a telepath because of massive psychological damage that has crippled that aspect of his powers.
Here's my theory:
Given the number of telepaths versus the number of high-order energy manipulators, the number of telepath/telekinetics and the fact that, in the case of the one TP/TK whose development we've tracked, TP came first, it seems to me that TP and TK are closely related, but that TP's energetic requirements are far, far less (you aren't producing massive quantities of energy from your own body, for one thing.) So a mutant who is destined to have both powers, or TP and a modified TK (energy manipulation that is not straight TK, but involves some intermediary-- such as Magneto's power, which is clearly related to TK), but is under conditions of extreme physical deprivation, is likely to manifest TP first if any power develops at all.
We know Magneto was very close to the age of manifestation when his family was murdered, because child mutants subject to stressors significantly before age of manifestation simply die (ie, Illyana did not summon a stepping disk to save herself from an oncoming tractor in Giant-Size X-Men #1; if Colossus hadn't saved her, she would have died.) We know that he wasn't actually at age of manifestation yet, because most mutants who manifest are able to use their powers on a regular basis afterward-- their control may suck, but the powers aren't dormant-- and it would have been at least a week before starvation and abuse suffered at the camp could have driven the power back underground. In between, young Magnus would have used the power if he had it; since he didn't, we assume its energetic requirements were sufficient that he simply wasn't developed enough to have it on a regular basis yet.
But that means he was close enough to manifestation that, if he was a latent telepath, that might well have manifested soon after (generating magnetic energy out of your body is probably impossible if you have barely enough energy to stay alive, but telepathy doesn't require a lot of energy, and most of the development had to be already done or he couldn't have manifested his magnetism the once.) Now, imagine manifesting telepathy in the middle of Auschwitz.
Jean Grey went catatonic from sharing the death of her best friend. Catatonia was not an option for the young Magnus if he wanted to survive. The only thing he could have done would have been to seal off the nascent power, and since this was an unconscious action, not a conscious, controlled decision, whatever he did to block his own power seems to have been more or less permanent. Joan Vinge speculated in her Cat series that a telepath subjected to an extremely traumatic event could invert his telepathy, weaving it into an impenetrable mental shield-- without extensive therapy, he could not unweave it and use it as telepathy even if he knew how and wanted to very badly. Hmm, who do we know who has a virtually impenetrable mental shield? And even as determined as Magneto is, and as eager to exploit his own power to its fullest extent, the nature of the damage may well be such that force of will can't unlock the power to any significant degree. Can you see Magneto being willing to undergo psychological therapy in order to become a telepath, when he has a perfectly good and extremely powerful ability to fall back on? I can't.
Another possibility is that both the telepathy and the magnetic powers were dormant until adulthood, but that the psychological scarring caused by Auschwitz was enough to block Magnus' telepathy. I'm not sure I buy this one, myself. Rachel Summers suffered abuses similar to what Magnus suffered in Auschwitz, but was a powerful telepath. Of course, different people may respond differently, but personally I prefer my theory. :-)
This has interesting implications if a writer wanted to follow up on them. Joseph, who (assuming he is genetically identical to Magneto-- either a mindwiped Magneto or a clone) suffers from entirely different psychological damage than Magneto did, may not necessarily have the same degree of inhibition. Particularly if he is a clone rather than the original Magneto, the implication is that Joseph could be trained to be a telepath, since he would be far less resistant to change and to being helped than Magneto, and he doesn't remember the stressor that blocked the TP in the first place.
If Magneto Is A Psi, Does That Explain The Mind Control Powers?
Not in itself. The kind of power required to paralyze all of the X-Men, and their powers, at the same time, including Charles Xavier, would take a seriously kickass telepath to do. Magneto simply doesn't have that level of telepathic ability, and even if he weren't blocked he probably never would.
So is it iron in the blood? No-- again, that would cause strokes and aneurysms and fainting, not paralysis or an inability to lie (see Vision and Scarlet Witch I #4, where he uses the power to compel Bova to tell him his children's names.) Bioelectric control? Hard to imagine how bioelectric control could result in being forced to give information.
The best explanation I can think of is that he does it in concert with his psi, in such an intertwined fashion that he himself has no idea he's using psi to do this. One imagines that, if telepathy does not equate to incredibly subtle neurological control, that at the very least it causes it.
That is, imagine that mind is an emergent property of a complex neurological system, composed of some unknown form of radiation that telepaths can manipulate. Electrical impulses in the brain give rise to changes in the mental radiation, and vice versa. When Xavier does his "these are not the mutants you're looking for" stunt, he may not be directly operating on the electrical impulses of the brain, but he is altering them nonetheless as a side effect of his telepathic manipulation.
By combining low-level and/or inhibited psi, and electromagnetic control that can extend down to the molecular level (but usually doesn't because of the limitations of the brain of the user), one could get a gestalt power-- magnetic induction mind control-- that neither power by itself could have achieved. Magneto doesn't know how he does this, he only knows it works, which is why he claims he's manipulating blood flow. He's manipulating something, but it's so close to the edges of what he can perceive that he isn't sure what (and, being Magneto, he claims he knows rather than admit to being clueless about his own power.) This seems a remarkably stupid stunt for such an intelligent man until you remember this is also the guy who promulgated "Homo superior".