When Terrence Howard was cast as Rhodey in Iron Man, he was fresh off of an Oscar nomination for his role in Hustle & Flow. He was also one of the highest-paid actors in Hollywood at the time, commanding a salary of $5 million. But when it came time to negotiate his contract for the sequel, things quickly went south.
According to Howard, he was promised a gentleman's agreement that would give him a raise to $8 million if the first film was successful. When it became clear that Iron Man was going to be a smash hit, Howard says he asked for his raise and was denied. Instead, the studio offered him $1 million - less than what they paid Robert Downey Jr. for his role as Tony Stark.
Howard refused and was promptly replaced by Don Cheadle. In an interview with Variety, Howard opened up about the situation, saying It turns out that the person I helped become Iron Man... when it came time [for me] to re-up for the second movie, [he] took the money that was supposed to go to me and pushed me out.
While we'll never know exactly what happened behind closed doors, it's clear that there was bad blood between Howard and Downey Jr. - and that ultimately led to Howard being recast in Iron Man 2.