Does anyone know a simple out of the box option to limit traffic by IP with iptables?
Output to each connected IP should be limited to to 1.5Mbps but I don;t want to limit incoming connections from the web.
Ideally something with a tutorial because the LARC papers and stuff are impossible to read.

For example, the user connects by VPN and requests the webpage www.youtube.com/samplevideo1.
This should be sent to them at 1.5Mbs but if user 2 connects to www.youtube.com/video2, this should also be sent at 1.5Mbps but the incoming youtube connection needs to be allowed ot be unlimited to prevent incoming throttling..

I dont think its possible to limit traffic with iptables. proxy server could be a viable solution for it

It is, it can be done with iptables, iproute2, and tc.
Proxy would only be for web traffic hence the need to traffic shape everything else going through a VPN connection.
It's just that the documentation on tc is a bit difficult to read - just a simple how to for common cases would be useful.

Any ideas or sample scripts?