
I think Smith was taking him for a ride. Once the mind is aware of Zion, even though the person is still within a matrix construct, they cannot revert back to the original Matrix, because they have been liberated. The mind is funny that way, which is why Morpheus apologized to Neo for waiting so long to free him. The agents would have terminated Cipher, but the bigger question is:
"Was Cipher's destiny already known by the Agents, ie, that he would choose to betray Morpheus and eventually die?"
While leads us to yet another question:
"Were all the crew of Nebuchanezzer hand picked by the system to be liberated from the Matrix to assist Neo?"
Everything seems to point to this being a program within a program and because everything is supposed to happen just the way it did makes it seem so difficult to figure out or in other words everything has been created or prompted for Neo to make a certain choice, but it is still left up to Neo to make that choice.
Yes, I agree, Neo is the only one that can make a choice, and whose choice will affect the outcome. Everyone else are just pawns set to help or hinder Neo in making this choice.