Rank variable by group (dplyr)

For future readers, the rank by group variable can be achieved using base R. Per the OP's iris data example to rank according to Sepal.Length:

# ORDER BY SPECIES AND SEPAL.LENGTH
iris <- iris[with(iris, order(Species, Sepal.Length)), ]

# RUN A ROW COUNT FOR RANK BY SPECIES GROUP
iris$rank <- sapply(1:nrow(iris), 
                    function(i) sum(iris[1:i, c('Species')]==iris$Species[i]))

# FILTER DATA FRAME BY TOP 3
iris <- iris[iris$rank <= 3,]

The following produces the desired result as was specified.

library(dplyr)

by_species <- iris %>% arrange(Species, Sepal.Length) %>%
    group_by(Species) %>% 
    mutate(rank = rank(Sepal.Length, ties.method = "first"))

by_species %>% filter(rank <= 3)
##Source: local data frame [9 x 6]
##Groups: Species [3]
##
##  Sepal.Length Sepal.Width Petal.Length Petal.Width    Species  rank
##         (dbl)       (dbl)        (dbl)       (dbl)     (fctr) (int)
##1          4.3         3.0          1.1         0.1     setosa     1
##2          4.4         2.9          1.4         0.2     setosa     2
##3          4.4         3.0          1.3         0.2     setosa     3
##4          4.9         2.4          3.3         1.0 versicolor     1
##5          5.0         2.0          3.5         1.0 versicolor     2
##6          5.0         2.3          3.3         1.0 versicolor     3
##7          4.9         2.5          4.5         1.7  virginica     1
##8          5.6         2.8          4.9         2.0  virginica     2
##9          5.7         2.5          5.0         2.0  virginica     3

by_species %>% slice(1:3)
##Source: local data frame [9 x 6]
##Groups: Species [3]
##
##  Sepal.Length Sepal.Width Petal.Length Petal.Width    Species  rank
##         (dbl)       (dbl)        (dbl)       (dbl)     (fctr) (int)
##1          4.3         3.0          1.1         0.1     setosa     1
##2          4.4         2.9          1.4         0.2     setosa     2
##3          4.4         3.0          1.3         0.2     setosa     3
##4          4.9         2.4          3.3         1.0 versicolor     1
##5          5.0         2.0          3.5         1.0 versicolor     2
##6          5.0         2.3          3.3         1.0 versicolor     3
##7          4.9         2.5          4.5         1.7  virginica     1
##8          5.6         2.8          4.9         2.0  virginica     2
##9          5.7         2.5          5.0         2.0  virginica     3