At the end of Revelations when Neo and Smith fought Smith had already assimilated The Oracle and as such was pretty much on equal footing with Neo. There's a little caveat there, though. In the last film after Smith overwrites The Oracle the other Smith's that are present step back in fear at the newly created "Oracle Smith", so I'm not necessarily sure each and every Smith had the exact same power level at that point, but from what was shown in Reloaded, each person he overwrites becomes him, albeit with the memories of the person he overwrote assimilated into the collective consciousness. I think it was Oracle Smith that fought Neo in the end though (iirc, he started quoting the Oracle and then realized that it was a trap set by her and his defeat was inevitable, but he followed through and overwrote Neo anyway, which passed Neo's code to all of the other people Smith had assimilated and cause a cascade disipation of "The One" code). So there's evidence that each Smith duplicate was a copy, and also evidence that there was a "Smith Prime", if you will, that was Neo's equal.
Anyway, if Thanos realizes he's in a virtual battlefield and wakes up in the real world that would be self bfr and constitute a loss/forfeiture. His only recourse for the actual battle, given the OP stips, is to fight within the Matrix reality, and in the Matrix Neo and Smith have a significant homefield advantage given the nature of there powers in that reality.
Also, regarding telepathy on Thanos's part, within the virtual reality it would still just be a code variant in Thanos's being to be manipulated and blocked/overwritten by Neo/Smith.
Also, regarding the Kid, he wasn't Neo's superior as far as ability, he was just able to come to the realization that the Matrix was a virtual reality and awaken without needing to be extracted by Neo, Trinity, and Morpheus. Neo did, however, make contact with the kid and extraction was going to occur. His self realization simply made it unnecessary. It's all shown in the Animatrix.