That should work if $source has a value. It should replace $source with whatever it's value is.
So if you had something like:
PHP Code:
<?
$source = "YourValue";
?>
iView.document.body.innerHTML = '<? echo $source; ?>';
The result should be:
Code:
iView.document.body.innerHTML = 'YourValue';
You can also do it as <?=$source?> for a little shortcut.
If it's just printing out <? echo $source; ?> then you may not have the short_open_tag enabled.