Please correct my understanding if I missed something.
In Iron Man, it is established that Tony needs a strong electromagnet to stop the shrapnel from reaching his heart, so he doesn't die. So he makes the Arc Reactor, which is the power source for that magnet.
In Iron Man 2, a major plot point is that the Arc Reactor is poisoning him, so he's dying anyway.
Is there any reason given why the Arc Reactor has to be inside of him? Wouldn't it just be enough to have the Arc Reactor outside of him, connected with a cable to the magnet?
I mean, it's not a pretty solution, but there are enough people who are kept alive by e.g. external oxygen tanks they are tethered to. As far as I know, no one has ever seriously considered implanting an oxygen tank into someone, just so they don't have to carry it around with them.