You can't do this strictly in HTML and even using a server language like ASP.NET, you are not guranteed to get the desired effect.
Here is the reason why: Say that you employ ASP.NET and you dynamically alter the height of your iframe control based upon the values being loaded into the iframe (This, in and of itself would be a bit complex since you would have to capture all the HTTP requests) and you assume a font size of 12px. So you go and do some computations of how many lines of text are in the file and equate that to the size the iframe should be and it works, as long as the user hasnt messed with their browser!
What I mean is, if the user has held down their ctrl key and rolled their scroll wheel on their mouse, the text on the page will get significantly larger (or smaller) and will cause your iframe to produce scroll bars.
hth.
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