Google always encourages publishers to experiment with their inventories, placement formats  to provide their users rich experience by providing relevant content and advertisements, and hence maximize their revenues. Google recently clarified on Iframes in their adsense blog. Google allows use of Iframes, but disallows misuse of them - as ads in Iframe can be obscured, and can hurt advertisers. Furthermore, as per Google, using hidden Iframes, coss-domain Iframes is an abuse.  Taking into view this abuse, they have recently changed their Ad Behaviour Policy (Changed Policy is in bold).

“AdSense code may not be altered, nor may the standard behavior, targeting or delivery of ads be manipulated in any way that is not explicitly permitted by Google. This includes but is not limited to the following: clicking Google ads may not result in a new browser window being launched, nor may Google ads be placed in an IFRAME.”

There can be an exception to the policies only with Google's authorization.