Well you only have a small extract of what I am doing. Even so it is a little weird so I will explain (any suggestions of alternative ways welcome!):
I want to include within my view some of my own buttons and menus on the left of the screen; plus show an external web page from the internet.
Having an iframe keeps the two parts isolated and prevents conflicts between my CSS and the CSS of the web page.
The iframe source calls a web2py controller which fetches the page from the web. This allows me to make some changes to the web page within web2py before it is loaded in the iframe. It also gives the iframe has the same domain as the parent view which is needed to give the parent javascript access the iframe document.
And I set the response.view because I have several controllers each with a single view and would rather put all the views in one directory (default); whereas normally a controller looks in the view/controller folder.