Agreed. I think for it to truly work it would require support from the terminal in the form of letting the processor know if the terminal does or doesn't suppor

Agreed. I think for it to truly work it would require support from the terminal in the form of letting the processor know if the terminal does or doesn't support chip & pin. If the terminal doesn't support it the processor always lets it through. If the terminal does support it the processor only lets it through if using chip and pin. Then again, maybe there won't be non chip and pin terminal much longer so that won't matter.