Would having to ads on one site and using this site as an iframe on another site which already has 2 ads be breaking the rules?
Ummmm, yes, it most certainly would. Do not try to circumvent the Policies, it will only lead to woe.
Why would you want to have more than 3 ads on your site anyways? It makes your website load so much slower.. and that just drives people away.. and usually I can barely even fit 3 on there and keep it looking pretty.. Just worry about having a good site, and income will come regardless.