"I think the proplem you are having is more the fact that the cast iron and by that mater the whole shop was so cold and then you warmed it up with propane. I think the water you found was more a matter of condensation than a by product of the propane burning. The propane burning will give off some mosture but not the amount you are talking about."
From the standpoint of someone that has a couple of Chemical Engineering degrees, I can assure you that open-flame combustion of any organic fuel (propane, kerosene are common ones) will dump a huge amount of water vapor in the air. Moreover, if you heat the air in the garage by an indirect or non-combustion source, the relative humidity will drop like a rock, usually far, far below the condensation point at above 50 degrees or so.
Propane heaters and kerosene wick-type heaters are great things to have in a garage where you want to change the oil in the car, but definitely not so good for a Woodworker's shop.
From the standpoint of energy efficiency, electric resistive heat is nearly at the bottom of the scale. That would include baseboard and overhead, radiative-type heaters. Slightly more efficient are forced-air electric resistive heaters. Enclosed-oil type electric heaters are about as efficient as forced-air electric resistive heaters. Moving up the scale, electric heat pumps are considerably more efficient than the resistive types, though considerably more in initial outlay than a resistive heater.
Finally, currently one of the most efficient heat sources you can buy is a condensing natural gas furnace. Not only is the natural gas combustion very efficient (these units, by the way, don't vent the combustion directly to the heated space, so they don't contribute to increased humidity), but the unit uses a small heat pump to remove the heat of condensation of the water vapor in the combustion gases, and re-cycles that heat back to the heated space. They're nearly 95% efficient, but fairly expensive for the installation - I think I'd only do something like that if I had a very well insulated space that was going to be my permanent shop.