Hello Scorpie,
I have been working on the D&D for iframe for a while now which I needed for my app: WIDGaT
The only solution I found was to register a script in the dom of the document in the frame which relay the mouse events to the top window (might cause cross domain problems).
Here is a link to the script I'm using:
This only works on Firefox and Chrome so far, IE uses a different way of firing events (looking into it).
It's the first time I'm using ExtJS and it's a pretty big app so the code is most definitely not optimised but I'm doing exactly what you are looking for so keep looking you'll probably find what you need