An iframe cannot stretch with its content. Use a server side include as sam said. I frames are designed to scroll, not stretch, and if you turn scrolling off then content will just be hidden.
The technique to do what you describe uses a hidden iframe, Javascript and the DOM to transfer content loaded into the iframe into a normal div on the page. Netscape called it "Inner Browsing" and there's an article about it on their devedge site. I've made extensive use of it here if you want to see examples.
an Ilayer would do nothing for you anyway, it does not use any content from another file and it then defeats the purpose, you might as well drop it in a div or some other block element. It was not NN proprietary, It was supported by ie, so I do not know whos proprietary it was... but it was proprietary by someone, maybe NN & IE... I dono.
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