Uuummm...has anyone considered the possibility that not only are there nested matrices (in my opinion 2 levels at most) but also that Neo (like smith and the oracle) is a program specially created as a form of control. Here's how my theory goes.
The architect (on suggestions from the oracle) creates the "real world" (an alternate Matrix) as a form of control for those who reject the perfection of the Matirix we have come to love and know. To make this form of freedom realisitic the architect creates "The One" as the first person to escape the Matrix. The one is specially written to have the ability to manipulate the Matrix. His "code" is transferred into the human population (who are themselves still computer projections of their real selves) in this "real world" to lie dormant only to be rewakened at some later time as the reincarnation of the one. The reason the oracle can predict his every move is because he is essentially a program i.e. deterministic, in a sense. When he destroyed Smith in the first film part of Neo's code was transferred to Smith. Among other things the ability to transcend Matrix levels (The ability to enter the "real world"😉. Also, part of what "the one" is supposed to do is now known to Smith although he doesn't quite understand it. This is why he is always around the corner everywhere Neo goes and he makes comments like "..Surprised to see me. I'm not surprised to see you".
The sequence of events that start with finding "the one" and ending with "the one" facing the architect has occured multiple times (6 to be exact). However, this time "the one" program has the same flaw that made the humans reject the 1st Matrix program. The problem of choice. This is compounded by his love of Trinity so that for the first time "The one" does not choose to re-enter the cycle which his predecessors had, so many times in the past, done. This leaves a possibility that has never been considered before.
I'll shu my yap now. Comments anyone?
😉