Do you intend to only do business in the Republic?
Have to say it seems strange that the UK hosters cannot change the VAT rate - surely it's only a little piece of code?
A VAT invoice is so-called partially because the VAT amount must be clearly identified. If selling business to business, not displaying VAT as a separate entry will be a problem I'm sure. Selling to non-VAT registered individuals, it probably won't matter.
Another possible hiccup in displaying a VAT inclusive price could be shipping - this may or may not come into it, but no VAT on post vs VAT on courier etc...a lot may depend on the functionality of your site.