We study the dynamics of Rydberg ions trapped in a linear Paul trap, and discuss the properties of ionic Rydberg states in the presence of the static and time-dependent electric fields constituting the trap. The interactions in a system of many ions are investigated and coupled equations of the internal electronic states and the external oscillator modes of a linear ion chain are derived. We show that strong dipole-dipole interactions among the ions can be achieved by microwave dressing fields. Using low-angular momentum states with large quantum defect the internal dynamics can be mapped onto an effective spin model of a pair of dressed Rydberg states that describes the dynamics of Rydberg excitations in the ion crystal. We demonstrate that excitation transfer through the ion chain can be achieved on a nanosecond timescale and discuss the implementation of a fast two-qubit gate in the ion chain.