Since the system works for 7 day travelcards I bet the
real reason isn't a technical one.

TfL wants us to buy our tickets online or by telephone and for us
to do it in fewer transactions. i.e. by holding a pay as you go balance.

Selling one day travelcards on Oyster would involve more transactions
than using prepay+capping. Also tickets cannot be purchased online
for same-day use (you have to do it the day before). Assuming most
people would continue to buy travelcards on day of use, they would
have to buy them at the station and the TfL business plan (and use of
technology) is about getting sales out of stations.