Why use humans for power?
The simpliest answer is that they don't. A great wealth of plot holes and irrational possibilities open up if humans are used strictly for power. There must be an ulterior motive and we believe that motive is semi-benevolent. The machines, faced with a choice between human extermination or constant war, ended up compromising with each other to create a zoo... yes, it is for the preservation of humanity and the sake of peace and machine/human interaction, but a caged environment nonetheless. Check out this theory.
Consulting the '96 and '97 drafts of the script, it is even more clear that the machines run largely on fusion. Humans act only as sparkplugs. The Zionists probably have an alternative power source, so the Matrix simply isn't a pragmatic power plant... although it is a very effecient means of capturing otherwise wasted energy.
Then why does Morpheous lie?
Does he? He never explicitly says that the machines run primarily on human generated power. His speech is largely concerned with conveying the horror of the human condition and the "pure horrifying precision" of the machines. Reading the shooting script, the emphasis on recycling, effeciency, etc. is much more obvious. The implication of human-based power is clearly there though. Why?
Well, it's a movie so you need to cater to your audience. This implication provides enough of a motive for your average viewer. Those that dive deeper begin to see the holes, but thankfully it remains ONLY an implied concept. This allows us to reach a rational conclusion otherwise, with less or no holes.
Who is the Oracle?
The Oracle is a machine allied with the Resistence. Yes, there are benevolent machines.. that concept alone closes many holes. Further, making the Oracle a machine is an elegant explanation to many related questions surrounding her (her age, residence, and ability). Much more so than trying to make her human, immortal, and mystic. Read more about the Oracle.
How did Cypher visit Smith?
The typical answer is that Cypher prepared the visit ahead of time (before the conversation with Neo) and that an Operator is unnecessary for diving into the Matrix. But let's go deeper. In "The Art of The Matrix" Geof Darrow talks about concept art he did for the personal quarters of the crew. He points out that the crew have personal terminals for entering the Matrix in his illustration. In the movie you can see part of this setup behind Neo when Morpheous apologizes to him. So this is our view:
The crew have terminals in their personal quarters for loading Construct programs... this makes sense for Mouse and his offer, heh. Dives into the Matrix, however, are dangerous so protocol dicates that they go in with at least an Operator and most likely dives are logged and restricted to deck terminal use. So we agree that Cypher was preparing for his dive when Neo came in, but we believe he was hacking ship security so that he could access the Matrix from his private terminal.
This view eliminates any worry of being caught in the act. Also in "The Art of The Matrix" is an alternate introduction to The Matrix, where a lovesick hacker goes back to visit his still plugged in girlfriend. So apparently, in the Wachowskis' minds, private dives were never a problem.
How can anything challenge Neo?
Despite the implication otherwise (curse Morpheous and his amphibolic way of speaking... remember he's the Baptist to this Messiah, he's hardly inclined to speak in an objective or technical sense) , The One is quite limited with a specific set of powers. To summarize, Neo only has the ability to edit himself (through which we can explain all powers from super strength to telekinesis to flight, etc.) to a greater degree than other Zionists. We will not see Neo teleport, throw fireballs, or wish people out of existence.
Why is The One stronger than the Agents then?
We don't deny The One's powers, we just say that they aren't unlimited. This is fleshed out much more in the Theory section, but what it comes down to is visible evidence versus certain interpretations of certain lines. We believe many people should rethink their interpretations.
Anyways, the typical answer is to quote this: "Yet their strength and their speed are still based in a world that is built on rules. Because of that, they will never be as strong or as fast as you can be." But in many ways this answer isn't any better than just saying "Because" in our framework which dictates Neo is bound by rules too. More on that in a moment but first...
Example of critical interpretation: At this point in the movie, we interpret this to be Morpheous speaking in amphibolic terms like the Oracle. His goal is more directed towards freeing Neo's mind from past rule-based restrictions than to provide a technically accurate description of Neo's powers. At this point, Neo doesn't need to know the rules and limitations he will obey (and that we observe) once he becomes The One, more important is to free his mind. Indeed, Morpheous' teaching method is quite inductive.
Back to specific reasons for Neo's strength. Best if you read the entire Powers theory tree under the Theories section but basically Agents have a set max and Neo's set max is higher. Simple, eh?
Why do Agents sometimes miss?
The short answer is that machines a limits too. Rather than just saying they're bound by rules, let's figure out what rules. So again, let's go deeper.
First we need to establish- for some- that Agents do indeed miss and that it is not purely the crew dodging. The most obvious example is during the Helicopter Rescue. Neo is sitting still and the Agents get off several shots which all miss. Except for Neo's two times in bullet time, all other shots seem to be misses too, but those examples are less clear.
Why should an Agent miss when they have the speed and reflexes capable of dodging bullets and strength that could hold a gun still without recoil? Beyond that, with the aid of a computer, aiming should be a snap. The assumption, of course, is that all these resources are available to Agents at all times.
Our view is that Agents are very human (can be distracted, surprised, hesitate, etc.) and have the potential for perfect aim in specific circumstances (focused and on queue) but largely can't take advantage of it. Their humanity is both their advantage and disadvantage.
Do machines know what chicken tastes like?
Probably, but that's not the real question, is it? You're wondering HOW they know what chicken tastes like and how they program it into the Matrix. The answer is that they don't. The simulation of the Matrix is particle and principle based... using real-world physics and simulated atoms. From there, they just let the world run. Chemical reactions occur just as they would in the real world to produce taste.
This is far more pragmatic than the alternative, where reality is reverse simulated and things begin to get ambigious and philosophical. How small a piece of a chicken is still chicken requiring a taste variable?
What is the Red Pill?
The Red Pill is actually a "normal" pill. It is simply chemically inducing Neo into disrupting his own carrier signal. Altering one's carrier signal is within the parameters of Self-Editing. Go check out Chemical Pill Theory which helps support this view.
When can humanity be free?
How did Neo come back to life?
This is a mechanical question that assumes that Neo actually died at some point and implies that a dead person cannot self-edit himself. We will say that Neo can use his abilities instinctively to an extent- for example, when Neo dodged bullets on the rooftop- so there is an aspect of innate programming involved. For The One, resurrection could be programmed in upon death. The resurrection itself is simply amplified human healing.
What happens to the bodies of the unplugged in the Matrix?
Assuming we're talking bodies unplugged unnaturally like Apoc and Switch, the bodies stay behind permanently (well, until decomposition sets in). If the do disappear, it is because of a machine cover-up (via meta-edit) but there's no reason to believe they disappear spontaneously. When Neo was freed the first time, his body should have disappeared like Morpheous' did. If your RSI doesn't disappear with your consciousness you die (so if just your mind goes- ala Apoc & Switch- or just your body goes- ala Smith's Loading ability- you die).
Why do the crew have to use a hardline to exit the Matrix?
Hardlines are the symbolic meta-tech gateway into and out of the Matrix, like the doors to a building. They allow the Zionists to spontaneously create or destroy matter at those points. Imagine them as unsecure doors to the building. A physical hardline is the symbol for this gateway, but not every hardline inside the Matrix is a gateway (Cypher's phone booth, for example). A gateway provides permission to enter the Matrix like a website that prevents direct linking to content. It also gives proper permission for leave with your RSI. See the above question.
Why aren't the crew unplugged when the hardline is cut?
The crew's connection to the Matrix is sustained via wireless broadcast not by the hardlines. Using the analogy above, it would be as if one of the doors to the building collapsed. The collapse itself does not kill you or prevent you from leaving from another door. Thanks to JPMaximilian for this question.
Why couldn't the Agent "dodge this"?
Queue Theory and machines are very human. Moreover, Trinity knew it, which is why she says it. That means that it is common knowledge that Agents have certain limitations.
Shouldn't Neo be blind and have bedsores?
No. Black Box of science fiction technology (another example: Zionist hovercrafts). Since he clearly isn't blind and doesn't have bedsores, so somehow the pods prevent it. The specific mechanism is unknown (some suggest electrically stimulating the muscles and that might account for some of it but not all of the atrophy prevention). Just an example of how to apply the Black Box, heh.