Actually, there is an effort going on in the ATM Forum led by folks in Bay Networks. It is called Integrated PNNI, which will do just what you described. It is at a very early stage, though. Its ATM address is coded into each host's comm software. This would be sub-optimal, but a reasonable solution.
Problem is that it is succeptible to routing loops.
I recommend RFC 1620 for an excellent discussion on these issues.