I honestly feel that it is not practical for the merchants to choose which cards to accept when all of them bear the same Visa / MC logo. This would only irate the customers and the time+effort together would not be worth it.

Dont forget the consumers who choose to get a reward card usually are customers who tend to be more educated consumers who want to make the most out of their spending which tend to be in the upper 50% of the $ spent among all consumers.

What I can see is the reward cards would eventually have LESS rewards and Annual Fee or Higher Annual Fee. It would be to a point that some may decide the net gain is not worth it after comparing the annual fee and not so valuable rewards.