Smith knew about Matrix 1.0. In M1 he elaborates on it to Morpheus. A priori there should be no reason to assume, that system agents don’t know the entire truth, if they know about 1.0.
I think Smith wants to END the loops. The endless Matrix 2.x going over and over and over again. And now he has the chance. Neo has created a virus-code in Smith (Neos first action as the One was – after all – to create a virus.). I think (as written earlier in another thread), that the Ones in each run of the Matrix accidentally creates a virus (viz. a viz. the cataclysmic system crash).
I agree that the machines are not set to start digging until the One is on the path to the Architect. What I meant by my previous post is, that the machines could start digging at any odd time they wanted. They’ve known the location of Zion since the first Anomaly.
Rereading said previous post, I realise I’m not being completely clear 🙂
My point is, that Zion can still be part of “the system of control” without being virtual. Many things from M1, are no longer what they appear. Zion is not a free city as such. It, too, is another system of control. The freedom enjoyed by the rebels is an illusion. The path of the One is control. The Oracles prophecies are control.
Humans, as just that, human beings, don’t have any purpose as such. Whatever purpose our rebels receive in the Matrix, are given to them by a program: The Oracle.
Morpheus was told he’d find The One. Trinity was told she’d fall in love with The One. Neo, that he was waiting for his next life to be The One. But was Cypher told, that he’d betray Morpheus?
In interpreting the films, you can speak of two types of “purpose”. One is the actions of each character, and how it affects the storyline. Cyphers “purpose” in M1 was to make it possible for the agents to catch Morpheus, so Neo would become The One.
The other type of purpose is the “path/destiny” given to our brave protagonists by the Oracle.