Here's the page that iWeb creates with the code you pasted.
Nowhere is iWeb mentioned.
http://www.andresalters.nl/iPhone/SaltersiPhone/AndreSaltersiPhone_files/widget1 _markup.html
I noticed Vimeo uses an iframe to link to the vimeo page. It's the old way of embedding videos. The later versions of Vimeo use other embed code. You video is 3 years old. That explains it.
Upload the same video again and see if the new code is provided.
Here's your code in a non-iWeb page. It still doesn't work on an iPad.
http://home.wyodor.net/vimeo/
Edit : I displayed the vimeo page on my iPad. The same message appears.
http://vimeo.com/2231894
Again, it's not an iWeb issue. So focus on the problem. And solve it where it occurs.