I don't buy that.
> Note that software is still protected by copyright regardless of its patent status.
Copyright just protects expression.
Suppose I invent a new way to compute shortest paths through a graph. Why is that less deserving of a patent than a new way type of gearing. Why should "protection" be limited to "don't copy my bits"?
Consider automatic transmission control. You're suggesting that it should be patentable if done mechanically but not if done via software. How does that make sense?
Disclosure: I have both hardware and software patents. I don't see a big difference between them.