The phase immiscibility and the excellent matching between Ag(001) and Fe(001) unit cells (mismatch 0.8 %) make Fe/Ag growth attractive in the field of low dimensionality magnetic systems. Intermixing could be drastically limited at deposition temperatures as low as 140-150 K. The film structural evolution induced by post-growth annealing presents many interesting aspects involving activated atomic exchange processes and affecting magnetic properties. Previous experiments, of He and low energy ion scattering on films deposited at 150 K, indicated the formation of a segregated Ag layer upon annealing at 550 K. Higher temperatures led to the embedding of Fe into the Ag matrix. In those experiments, information on sub-surface layers was attained by techniques mainly sensitive to the topmost layer. Here, systematic PED measurements, providing chemical selectivity and structural information for a depth of several layers, have been accompanied with a few XRD rod scans, yielding a better sensitivity to the buried interface and to the film long range order. The results of this paper allow a comparison with recent models enlightening the dissolution paths of an ultra thin metal film into a different metal, when both subsurface migration of the deposit and phase separation between substrate and deposit are favoured. The occurrence of a surfactant-like stage, in which a single layer of Ag covers the Fe film is demonstrated for films of 4-6 ML heated at 500-550 K. Evidence of a stage characterized by the formation of two Ag capping layers is also reported. As the annealing temperature was increased beyond 700 K, the surface layers closely resembled the structure of bare Ag(001) with the residual presence of subsurface Fe aggregates.