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.
Argument
This theory came about when trying to reconcile some potential plot holes. The first is this:
"The pill you took is part of a trace program. It's designed to disrupt your input/output carrier signal so we can pinpoint your location."
The natural assumption is that the Red Pill is custom code specifically designed to what it does. The problem with that belief is defining the line between what is allowed and what isn't. Why can the crew bring in a pill but not a gun with infinite ammo? Or why not a pill that gives its user infinite strength? What about a pill that ejects Bugs instead of a painful Debugger Gun (obviously constructed with in the Matrix)? We can try and work on that but let's go for the elegant answer, more on that later.
The other problem is a ripple from Self-Edit Theory. If the Red Pill is indeed custom code, then it suggests that the Zionists can edit things other than themselves beyond the normal parameters of the Matrix. Even worse, it means that code problems can be worked on outside the Matrix and the solutions brought in. If that is the case, then simply throw a lot of coders and man hours at a problem and a solution should present itself... there is no need for The One's unique abilities. So in search of an elegant answer that closes these holes the theory of a chemical pill arose.
First, let's see what chemicals can do to you in real life. They can alter your physiology and mental state in many ways. Viagra increases your libido, Mescaline causes hallucinations, Prozac makes you happy, etc. These take advantage existing body chemistry and reactions to the drugs one takes. Keep this in mind.
Next, let's assume that every human possesses the ability to disrupt their own carrier signal. If you've followed the entire human power theory carefully and read up on Neo's limitations, you know that we believe that Neo cannot do anything that has not been exhibited in other humans at some level. At the end of the film, however, Neo stops the trace. This would seem to be a departure from any other human ability UNLESS everyone can do it... they just need the aid of mind-altering chemicals to get there.
The Red Pill is a designer drug that brings people to the place where they can Self-Edit their carrier signal. Later, when Neo is The One (thus able to Self-Edit to a greater degree than any other Zionist) he does it without the aid of drugs. This solves both plot holes elegantly since none of the rules of the Matrix are broken or bent for the sake of the Pill... it is not really a code solution so much as a chemical one.
Evidence
1. Works with every theory. And it's an Elegant Answer to boot. This makes the Project very happy. Heh.
2. Bug versus Injection. Look at which elements are chemical versus mechanical. Those dealing with the mind, the Blue Pill, the Cookie, and the Injection all provide temporary results through the bloodstream. Compare that to the Bug, which is mechanical, invasive, and permanent... with nothing to do with the mind. If these elements were custom code and the Agents have control of Neo's RSI (mouth edit), why not simply add the bug code to Neo on the meta-level? It is because there are rules to the Matrix that even the Agents cannot alter. The Bug is actually mechanically what it is (that is: if you were to build that device in the real world, it would work), not simply symbolic of some code. Likewise, the other elements are really what they are.
3. Spontaneously freed people. The Animatrix short "World Record" demonstrates that people can spontaneously free themselves without the aid of the Red Pill. A few of the online comics suggest the same thing. It is very likely The First freed himself as well. This means that disrupting one's carrier signal is an ability with in human and Self-Editing limits.
Objections
1. The biggest objection is- once again, sheesh- the words of Morpheous. The thing is, that it does not have to be interpreted as the pill being a piece of custom code. Morpheous could mean "program" as a "planned series of events" (which might even be automated by a computer program making the term even more apt).
When he says "designed" he means just that. Both medical and illegal drugs can be designed (not just discovered). How did they design it? Perhaps they imitated the chemistry of those who spontaneously freed themselves.
2. Why not make pills to amplify different human abilities if they can do this one? The answer is simple, just like the real world drugs have side effects. The Red Pill causes hallucinations and puts Neo into cardiac arrest. Besides that, the effects would only be temporary.