Ever Wonder Why Neo did'nt just kill all the Agent Smith's in Reloaded?
But Neo DID, kill Programs. but not agents, this time around.
Well Agents are people. Actual People enslaved in the Matrix. The Very People He and Morpheus are trying to Save. If you kill an agent, you'll see the body of the over taken human, remains. While the same agent will them remorph into the closest human body, as a host.
Think about this. If Smith acutually DOES copy himself from EVERYONE, where the entire earth is an Agent Smith. Then that means he Represents every LIFE or slave in the Matrix. Um This guy is the Answer. 2 Things come to mind from this situation:
1-He probably has the Power to free everyone from the Matrix HIMSELF!
2-OOORRR, in the same vein. The Machines made this program to Perfect, "Free Will" IF INFACT, Smith, (Stemming from his absorbtion of Neo and Vice versa) can inhabit EVERY SINGLE LIFE FORM, PLUS, Smith IS INFACT, excersizing FREE WILL, Then It can be assumed that this IS the End Result the Machines Wanted. They have now ACCOMPLISHED free will within SMITH...ALAS he is STILL PART of the Matrix, and they can thus Control him, and consequently Smith Now controls the lives of EVERY being on earth. Their Minds anyway.
So From that, I can see part 3 being about, the final battle, Smith Flying around..blah blah, and ofcourse, to give the hero props to Neo, instead of Smith. They'll have NEO...take Smiths ability to Copy himself, and NEO will represent Every life within the Matrix, Freeing their Minds, in exchange for his. The Matrix will Die.