Signal spacing is the same for 110mph as it is 125mph (minimum 2039m on level ground IIRC). As the signals west of Bedwyn are over 1.5miles apart, spacing certainly isn't an issue.
Curves, however, are another matter. There's probably higher maintenance costs with 125mph as well. With only just over a dozen trains each way between Castle Cary and Cogload, it probably isn't worth the cost.
How fast is the route from Bristol Temple Meads to Taunton, as it doesn't seem any faster than the Berks and Hants.