If you add the fancybox-iframe to a top level menu item, where there are sub items under that menu item – all the menu items in that group automatically get opened in the iFrame.
Instead of only the single menu item you specifically applied the fancybox-iframe class on.
Ok, this is indeed the case. However, a quick/simple solution is not possible. It will be added as a “tofix” for the next release. Until then, you can use the class “nofancybox” for all sub-menu items under the iframe menu entry.