Derek,
Problems are there to be solved not to be shied away from, it's from problems and getting over them that you gain experience and confidence! I have straightened parrallel shafts in the past and really there is no substitute for doing it, it's not something that can be readily book learnt. It's really down to an intuitive understanding of where the bend actually is and judging where to apply a force to correct it and how far to push it! Also depends on the material and its resilience. I would say from your short foray into the subject you didn't do too bad. Look on the bright side, you didn't make it worse!
Bearings then; Yes cast iron is a good bearing material paired with steel, in fact many older small lathes have plain cast iron headstock bearings. Not so good for high shaft speeds but the big advantage is cast iron contains a fair amount of free graphite which on its own is a lubricant also cast iron due to its grain structure tends to "hold" oil (try painting an old bit of cast iron machinery that has been well coated in oil over its life!). Traditionally from full size these bearings would be bronze. Bronze although soft can actually be a hard wearing material and where low carbon steel un hardened shafts are run in bronze bearings it is often the shaft that wears faster than the bearing! Brass as a bearing material in an application like this – forget it! Fine for slow moving items like clocks, for use on a fast revolving shaft it will wear very rapidly. In the days of yore bearings were often called brasses – big end brass- in fact they were bronze unless white metalled and force fed oil.
So yes feel free if you want to use cast iron as long as it's a free graphite (grey) iron and you fit good lubricators. Personally I would use bronze cos that's what was always done and you generally find with this type of thing the old boys knew a thing or two but no harm in stretching the envelope and trying something different.
Final thoughts, engineering is generally a pursuit of patience and tenacity. The man who never made a mistake, never made anything and if these things were easy to build everyone would be doing it! Keep at it, you'll get there in the end even if there are a few hiccups along the way.
All the best,
Paul.