Here's my problem with the whole Matrix in Matrix theory; Why go to all the effort to program the second level Matrix? Others have stated that it would be necessary to control the humans who become aware of the first level Matrix. Wouldn't it be easier to just kill them (disconnect them and dump them into the drink). They've got millions of other humans working just fine. Delete the ones who aren't!
Of course, IF the whole concept of the machines, humans, batteries, matrix, etc. is all just a game for some higher level group, then all bets are off. But that would suck! The whole 'world inside a world inside a world' concept has been done before. Anyone remember a movie called
The Thirteenth Floor?