1. As a general rule of browsers, no. GWT/GXT can't do anything normal JavaScript cannot do, as otherwise GWT would be the greatest/worst way to take over someone else's computer... At the end of the compiler, its all JavaScript, so we have to follow the JavaScript rules. What are you trying to achieve? GXT has a Shim.cover method, which prevents events from even going inside the iframe in the first place - very useful when doing drag and drop.
An iframe is used to load all of the source code for the app to get it running - this prevents your compiled application from interfering with any existing JavaScript on the page. Widgets are *not* rendered in that iframe - that happens in the main body of the main window. Load up http://sencha.com/examples/ and use Firebug or Chrome's Inspector to see this.