It's not off-limits. But, it's not required (for most balloons, ULs, etc). And due to cost and/or weight, people don't always use it when it's not mandatory.
The comments I was reading at ArsTechnica suggested that adding transponders was off-limits to balloons. The argument was that balloon operators wanted to add transponders but that it was resisted by FAA worrying about there being too many non-plane transponders for pilots/ATC to keep track of.
I obviously don't know which is right, but it does show that there is definitely confusion out there about the issue.
