Suppose, in the matrix, that since the cycle has been broken, that in the matrix troops are in Iraq.

But, if the limits of the matrix are focused only around the Mega City, than what would be happening overseas and such?

And what about Bluepill militarymen who are due to serve in Iraq? Just implant memories into their brains that tell them they've already been there?

Three things to consider

First is the city is set in perma 1999 and something such as a war can not be allowed to happen in order to keep up this illusion.
Second that the Matrix is only the Mega City and maybe a bit further out but other countries other then the one the city is in are all fabricated so news of other wars happening would be dealt with in the same way foreign news is handed out. Fabricated and then distributed via the media and possibly every now and then a friend of a friend who knows someone in said war.
Third Machine efficiency. Human wars would have their crops killing each other and thus be inefficient other then as a means of population control to allow to happen.

Shoot, what about something as simple as travelling overseas?  Or even to another state?  I mean...  we have the Mega City airport.  What happens to the blues that decide to take a vacation to...  Bermuda or something?  They just put in stasis for a few weeks and have memories implanted?

Your thinking in terms of time as we know them but that isn't the case in the Matrix. That trip to Bermuda might never of happened in the current 1999, but 3 1999's later it very well could have. Remember the Matrix is set in a period that is "boring" and very susceptible to injection of memories. So just because this round of 1999 they don't go on that trip doesnt mean they never did.

In the cases though of sudden impulse I believe this is where the Coroners idea comes in that uses foreign travels as a means of population control

Yes, I thought of this, too, though not necessarily as it only pertains to wars.  I pretty much just think of it like Dark City.  All the info received is simply fabricated to keep the people from realizing there is really just the one, large metropolis.  Redpills know the difference, but there it is.

Wow, glad to see someone else has the "Dark City" principle in mind in considering what goes on in the Mega-City as we Redpills know it and as the Bluepills are conditioned to know it.

As to Bluepill wars, I imagine the Machines have found a way to recycle old news broadcasts from waaaay back, before all this began, piping the reports/footage in by some hyper-digital means. They just relabel it all as "1999". As for the Bluepills who are in the military, since it's all a simulation anyway, they pipe in the images/sensations/etc. of being in combat in Iraq/Kosovo/Somalia/:: insert theater of war of choice::, just as they pipe in the images/sensations of working in a office in Downtown to a Bluepill who works in an office.