"Family Channel" of the Internet?

[Ken Kirksey <kkirksey@appstate.campus.mci.net>]

I had a rather interesting conversation today with a man who works for an 
individual who is getting into the ISP business. The guy freely admitted 
that he was not a technical kind of guy, and was only repeating what he 
had been told.  The gist of the conversation:  this company was going to 
try to position itself as, and I quote, "The Family Channel of the 
Internet" by going SurfWatch one better.  If you sign up with them as 
your ISP, you'll only be able to access sites that they have personally 
inspected and approved.  He said that they were going to do this, again I 
quote, "using the same encryption that Visa and Mastercard use."  The 
last statment pegged my bogometer, of course.  
Now, since I know that I don't know everything about crypto, and I know 
even less about the inner workings of IP, I'm going to pose a couple of 
questions:

1) Is it technically possible for them to limit access to only approved 
IP addresses?  If so, how can they do this, and is it possible to get 
around these measures.

2) What in the world would SET--I assume that was what he was talking 
about--have to do with this?

3) In general, how would you use crypto to ensure that your users only 
connected to approved sites, regardless of the platform or browser 
software they were using?

I asked the guy to send me some technical details.  If I receive them, 
I'll share unless he makes me sign an NDA.

Ken