Cost is probably the biggest issue. With Notes, you pay an annual CAL fee. That adds up for an ISP. Most ISPs use a solution that was designed for ISPs, where Notes/Domino was designed for the corporate/enterprise environment.
The other thing is that most ISPs want something that allows you to use a UNIX authentication method. Domino doesn't support that at this time.
Don't get me wrong, an ISP [italics]could[/italics] run Domino for their mail, but I don't think it would be a good idea.