No, you can't, that function is useless. If that example should be mentioned, it should be *only* because of confusion like this, which makes discussing the proposal harder (I've seen it a lot in the past).

The possible set of `fn produce_iter_static<X: Iterator<u8>>() -> X` you can write is made up *entirely* of functions that always fail.
Why? There is no static method allowing you to construct an `X`, only knowing that it implements `Iterator<u8>`.