As you probably expect from this administration, the "recommended" ISP logging requirements are totally pointless and might catch the small fry while letting the big fish escape.
Details below.
The reason why is simple: it's cheap ($25/month) to set up a virtual host that will act as a proxy for your web access, and there are very good free proxy tools that will relay HTTP traffic for you. Your home ISP will only see traffic to your proxy, likewise the web sites will not see traffic to your home ISP account.
There are countless legitimate reasons for this functionality. One common way to block employee access to unacceptable websites is to (quietly) force them to use proxies. These proxies can forward acceptable requests, deny the rest. (And sneaky employees can use their own proxies to get around their employer's filtering!) Many sites use it to provide local caching, e.g., by giving everyone the local copy of the CNN or SI homepage and only updating it every few minutes.
At one of my former employers, I set it up since some people had to work from home but the B2B partner required a single static IP address. The employees could bounce requests off the proxy server and the B2B partner was happy. (We kept that proxy server locked down to prevent others from using us to get into the B2B partner.)
The small fry won't know about this and can be nailed by the ISP records.
But the big fish? They have the resources to find shady people with sysadmin knowledge and this is an obvious countermeasure to ISP logging. As described this is only one step away, but there are additional countermeasures, e.g., imagine bouncing requests off of thousands of infected home PCs that are running their own proxy servers without the knowledge of their owners....
The feds could pass a law requiring ALL proxy server operators to maintain logs... but we come back to that $25/virtual server and the parttime SOHO sysadmin. He probably won't know the law, we won't have the resources to maintain extensive logs anyway, he may not have the skill to properly configure the software to keep these logs if he wanted to, and if he's up to no good he'll definitely want to take the rap for failing to maintain the logs instead of hitting pornographic terrorism sites.
(And with that I'm off to the mountains before my girlfriend finds a proxy for me!)