Matrix Within A Matrix

I've been watching the Matrix trilogy again over these last few days, trying to decrypt the hidden meaning and understand the movie. In the process of doing this, i have come to realize that it is definately not an easy task. I'm still in the process of trying to fully understand it, which is difficult because there are so many different interpretations of the movies. Anyway, i've stumbled upon a question that i thought could bring about an interesting discussion. "Is it possible that there is a Matrix within a Matrix in the movie?"

Could the 'real world', as the people freed from the Matrix believe it to be, really just be another program? Kind of like a different level of Matrix simulation than the known Matrix, but still a Matrix within a Matrix.

While i was doing some reading, i came across two main events in Reloaded that are used to support this theory: Agent Smith's unexpected manifestation in Zion (when he turns Bane into a duplicate just before Bane jacks out), and Neo's apparent ability to sense and stop the Sentinels just before the end of the movie. Here's one individual's thoughts, which i got from www.thematrix101.com

"Smith existing in the 'real world':
Smith is a program, so how can he actually exist in Zion? How can he be made real, when he's just a pile of bits in the first place? Zion must be part of the Matrix for Smith to exist in it, and the humans have no idea they're still in the Matrix. This seems like a possible explanation, but it's by no means the only explanation. Personally, I think it's entirely possible for a rogue program to copy itself onto someone's mind. Look at it this way: when Bane is jacked in, he's basically a floating mind, a bunch of brainwaves occupying an 'avatar' in a computer simulation. Essentially, he's temporarily a program running in the Matrix OS. Smith comes along and copies himself over this Bane program, overwriting the previous code. When Bane jacks out, the rewritten code of his brain now contains Smith's programming, not his own. He's still Bane, but Smith has taken control of his body by overwriting his mind. Far-fetched? A little, sure, but what we have to remember is we haven't been given all the rules of this universe. We really don't know for sure what the machines are capable of, or what Smith has become. Additionally, Smith has a little bit of Neo in him now, as he says "there's a connection". Could this little bit of humanity aid in his ability to control a mind in the real world?


Neo stopping the Sentinels:
Similar to the above argument, supporters of Matrix Within A Matrix believe the only way for Neo to have powers like that in the 'real world' is if it's not real, if it's just another level of the Matrix. Again I have to point out, we don't know all the rules of this universe. We only know what we've been given, so I think there could be a million explanations (ok, maybe not quite that many) for what Neo is suddenly capable of. The one I like is that Neo is not quite himself after his encounter with the Architect. That conversation is supposed to pretty much be the endpoint of the path of the One. He returns to the source, makes the expected choice, and his path ends soon after. I like to think that as soon as he passes through the glowing door, something changes. He's so close to the machines at this point, does he end up taking something back to the 'real world' with him? Neo's path involves constant change, constant evolution. As he enters that room, he's still evolving, still changing as he gets closer to his purpose, and in making the unexpected choice and leaving the Source, Neo has gained a closer relationship to the machine world, but can now use it for his own purposes, rather than theirs."

Well, i suppose this theory can be analyzed from different perspectives, but i thought that this is an interesting question, so i would love to hear any thoughts on this issue.