I think there could be some truth that the format is obsolete and having trouble adapting to modern security and privacy models. @faraday is right that upgrading standup of a game would be more difficult with SSH, and probably slightly more expensive.
What I'm seeing, though, is that privacy from a computer vulnerability standpoint (regardless of other risks) isnt as critical to MU players as the immediate privacy factor of staff snooping.
Forgive me if this seems presumptuous, but I kind of feel like the typical MU'er KNOWS there's privacy problems going in, but still does it anyway, and it's just constantly taken on good faith that their "private stuff" on games is private, even when there's a bazillion ways (right on down to staff backtracing IPs, email addresses, watching page streams, setting invisible and teleporting into scene room) that it could EASILY be spied on.
What is a little perplexing to me is that there are things on these games considered important enough to be kept secret, at least outside of "plot-type secrets only staff and players should know". Yet the concern still seems less for other players learning their IC secrets than it does being watched by unknown persons.