So I created an iframe box to update news about my brand using the iweb blog. everything is fine look wise... but at times i'll have a link on the "blog" page and when clicked on the iframe it opens up inside the box... when you click on READ MORE, it takes you to the entry portion, there the links are able to open in a separate window.

Here's a site that uses it perfect:

http://us.bape.com/news

this is my website:

http://web.me.com/cmmolina/Site/Home.html

notice the links inside the iframe. Thank you, hope i wasn't confusing. Thanks.

Links can have different targets:

_blank opens the link in anew window
_self opens the link in the same window and if inside an iFrame it is opened in the iFrame area
_top opens the link in the same window and if inside an iFrame area it is not opened in the the iFrame area but in the entire window

iWeb's doesn't let you choose to set links to _top.
Per default iWeb links are _self so Read more... links are _self hence open in the iFrame area. You could add a shape in front of the links, reduce its Opacity to 0% in the Inspector, link the shape to the entry and have it opening in a new window. However you have to do that manually and update each time you add a new entry to the blog.

Regards,
Cédric