Well, two options that I can think of:
#1 - Don't use an iframe for your content, as they're really just annoying
#2 - wrap your sub-menu items with an iframe and set z-index to, oooh say, 10?
I'm pretty sure nothing will go over an iframe (not in IE, anyway) except of course for another iframe with a higher z-index. Give that a shot. There's a link somewhere to this iframe-sub-menu-fixing idea but I can't remember it
Hopefully someone'll help there. But I'd just lose the iframe.