Copy html content from iframe into div ( ajax )?

No, you can't.

When you load a page from a different domain into the iframe, it becomes unreachable. You can no longer access the contents of the iframe, as it comes from a different domain.

The only thing that I know of that you can reliably load from a different domain is a script, which JSONP uses.

Can I, using ajax, load the content of test.html into a div in the main html page?

Yes (since your example has a relative URI and is on the same host) …

This idea is my solution for that fact that I'm actually trying to overcome the limitation with making ajax submits to remote hosts.

… and no. You still can't read data from remote hosts.

I'm sure someone will correct me if I'm wrong, but I believe that scripting across domain boundaries is restricted. Have you tried it? Here's a function that may help out.

function insertDivFromFrame(divname, framename) {    var frame = document.getElementById(framename);    var d = frame.contentWindow || frame.contentDocument;    if (oDoc.document) {d = d.document;}    document.getElementById('yourdiv').innerHTML = d.body.innerHTML;}

I'm not sure this code works... see http://xkr.us/articles/dom/iframe-document/ for more help on this.