Hee, see, he is still thoroughly fucked up in my head. Plus, you can use losing Pepper as a specific reason for him to go too far.

The thing that seems most horrifying to me is the growing-up part, not the initial cloning. Like, yeah, sure, creating a baby with Pepper's DNA: not a problem for Tony. But then what do you do with the baby? Well, let's say that you develop techniques that allow her to mature, physically and mentally, faster than normal, and three years later, you have a teenage Pepper Potts. What do you say when you ask her why she exists? "I cloned you so that eventually I can once again sleep with the woman I fell in love with?" She would be like that adopted African orphan, in that any kind of relationship with her, after he'd been her whole world growing up, would be weird and incestuous and creepy.

And I'm gonna stop brainstorming now, because I'm sure that whatever you write is going to be amazingly awesome.