While a case solution on the iPhone would work well, I can see why they might not do this for the iPad (designing an entire case, just for card swiping, for such a large device seems silly and wasteful), but something along the lines of this would be a huge improvement over the current card reader design (basically, it fits around the corner of the device, giving it much more stability): http://olloclip.com
Any cable that maintains mic capability with stock Apple headphones should be fine.
[1]: https://www.google.com/search?tbm=isch&hl=en&source=...
Bigger stores can probably use an iPad instead, but I don't think we'll see a Bluetooth solution for the above reason.
Actual wireless card device processor cost around $800. That let place for square to come up w/ something.
source: http://www.acceptcreditcard.ca/articles/using_a_wireless_car...
That being said, Intuit's UI is hideous, Square's is gorgeous.