"Unsupported" device - I've heard that before, too many times... =)
So after thinking on everything you've tried, it's safe to say that your AP is running PEAPv0 with EAP-MSCHAPv2 for Authentication. This is good news - as it is probably the most widely used Enterprise WiFi configuration, iOS devices should absolutely be compatible with this. Getting a non-domain XP PC connected was a great idea, as I have discovered that Windows XP is kind of "loose" in the way it handles PEAP certificates - it will accept any certificate given to it by a RADIUS server without question. Undoubtedly a big security hole, but it does have the advantage of being "user friendly." I don't think Apple's implementation is quite as loose, so even though you are manually accepting one certificate, you probably need more to complete the chain of trust required for your device to authenticate the server. This is a requirement for PEAP to function.
So at this point, I think your best bet would be to migrate over to the Credentials tab. If you're running the iPhone Config Utility on a PC which connects to the AP, you already have the certificates in your trusted certificate store - so simply hit the add button and add any relevant certificates. For example, if your domain is named "corporate", import any certificates bearing that domain. Once you've done this, head over to the Trust tab under WiFi and check off your newly imported certificates as being trusted for your connection.
In addition, if you can figure out what the name of the RADIUS server on the other end of the AP is doing the authentication, add it under "Trusted Certificate Names" - if you don't know it, you can also add a wildcard like "*.corporate" to trust any servers in your domain. This shotgun approach is probably your best bet for making it go initially.
You will know this is all working when you no longer get the dialog on your iPad to accept the certificate, and hopefully, you get an IP address.
We're truly in the thick of it now, and this is my last idea - so if this does not work, we will need to call on those stronger than I with iOS networking... or, you can call up your IT department and start the conversation off with the words "I bet you can't figure this out" - that always gets IT people going =)
Best of luck!
Sources:
http://howto.techworld.com/mobile-wireless/3451/use-peap-for-wireless-authentica tion/
http://images.apple.com/ipad/business/pdf/iPadDeploymentScenarios.pdf