Our science textbook had it as part of the chapter on nutrition. They said to pound the cereal to powder and then run a magnet over it to pick up the iron bits. We tried that, and it wasn't working. Then I remembered a youtube video on the subject my nephew had sent me awhile back. In that video, the man blended one cup of cereal in the blender with one cup of water. Then he stirred it in a cup, holding a magnet to the side. We tried it, and once we switched to a thin-sided disposable plastic cup and a non-metal stirring implement, we had great success.
The kids were fascinated. So was I.
In this last picture, if you look closely, you can see a grey splotch next to where we are holding the magnet. That is the iron particles!