Chances are there's no real "engine limitation". The only reason we don't get an actual complete pause is just another byproduct of the game being designed to be multiplayer-friendly.
Even in turn- based mode the time keep going outside of the battle area.
Not that it matters much, since the game doesn't really have the notion of passing time, a day/night cycle or a "clock" of any sort.
Of course, technically it should still be possible to add a pause that works at least when someone is playing solo, but I guess Larian couldn't be bothered with it since it's not a core feature for the way they intend for the game to be played.
Never mind that DOS 2 stats suggested that a good 90% of the players rarely used MP at all.
