If you change to "local echo" it would cause problems with programs such as vi which will interpret certain characters (such as hjkl) as special commands and won't actually draw them on the screen.
If you start a remote program that just "eats" your input without updating the terminal (like a password prompt) you won't see the 2nd tcp roundtrip.
You'd have the same behaviour with a serial link, rsh, telnet or anything else.
I think I saw a custom SSH client on hn some months ago that would try to compensate high network latencies by echoing the characters locally while waiting for the remote reply. It would then undo the local echo and use the "authoritative" reply instead.