You have the meaning exactly. Linn was just pointing out that "lege" only translates to "leech" in the archaic sense of "doctor". The name for the creature is "igle".
I had always assumed that doctors were called "leeches" because they used leeches. It seems that it may have been a coincidence, and that the creature gets its name from being a lake dweller, while the doctor gets the name from an old Germanic word meaning "to heal". (having studied the "lacnunga" manuscript, I should have been alert to that! https://en.wikipedia.org/wiki/Lacnunga)