Iodine-based battery cathodes have attracted significant interest due to their very high rate capability and the moderately high (200 mAh/g) specific capacity of iodine. However, issues related to loss of efficiency at higher loadings as well as electron shuttling and side-reactions have prevented batteries based on iodine chemistry from being competitive with current commercial lithium ion cells. In this work we demonstrate that one of the main limiting factors to increasing both the active material proportion of the formulated cathode as well as the total areal loading of active material is the instability of the SEI-layer at the lithium metal anode leading to electron shuttling and side reactions involving I2. Further, we demonstrate that via inclusion of oxidizing gas such via the direct injection of O2 gas or sealing cells inside an atmosphere of clean, dry air (CDA), a more robust SEI layer comprising a high proportion of oxygen can be formed which meaningfully stabilizes the lithium against shuttling by I2 in higher loading Li-I battery devices. In addition, the possibility of fabrication of lithium metal cells under a CDA environment rather than an argon one as is the case with most lithium metal batteries reported in the literature, has the potential to significantly simplify the manufacturing of this type of battery.