Yes, it is theoretically possible to support earlier versions but Apple makes it practically very awkward: around half of the top apps don't support iOS 5. Apple's own apps apparently don't support iOS 6.
Unfortunately this also puts developers in a really tough spot if they have a large number of iPad (or other users of obsolete devices) as they are unable to ship updates to that obsolete version and they are forced to either disable this download completely abandoning the customers or have it available and be unable to make any bugfixes or other updates
The second reason is because of the iPad mini. The non-retina Mini is an iPad 2, just in a smaller package.
I know some developers were complaining after the retina Mini was announced because Apple didn't update the non-retina version to the A7, so the effectively still have to support the iPad 2.