You'd need an isolation network for every single business in the US (10's of millions, IIRC).
Also, the current IP solutions are SSL encrypted. Also PIN based transactions have an even higher encryption on them. The PIN Pads have a specific key attached to them so they will only work with the current backend. If you switch processors, you have to switch PIN pads as well.
Another problem, the IP terminals a quite a bit more expensive. $200-$300 for dialup, $500-$600 for IP. (If you're paying more, you're being robbed!)