As far as I'm aware, Iheanacho won't need to replace Nasri on the "A" list at all, and we can have both available to us as Iheanacho can now be included on the "B" list. The fact that Brennan states Iheanacho "could replace him" is purely semantics as he can replace Nasri as and when needed on a game by game basis, but Nasri won't need to be excluded from our "A" list in order for that to happen.
According to UEFA Rule 43.11 "A player may be registered on List B if he is born on or after 1 January 1994 and has been eligible to play for the club concerned for any uninterrupted period of two years since his 15th birthday by the time he is registered with UEFA. Players aged 16 may be registered on List B if they have been registered with the participating club for the previous two years without interruption."
Nacho has been with us since January 2014, and therefore, must now be eligible for inclusion on our "B" list.
For reference - UEFA Rule 43.10 - "Each club is entitled to register an unlimited number of players on List B during the season. The list must be submitted by no later than 24.00CET on the day before the match in question."
There were issues with his work permit so it's not clear when he was registered as a City player.