Why is the Inertial Reference System not used to determine true altitude?
IRS will drift over time. Decision altitude is 200ft for ILS CAT I approach.  0.5nm drift is not to much for navigation but it will be huge difference in altitude and you can hit obstacles if your altitude has drifted just couple of feet. Probably it could be used if backed by GPS as EGPWS does or non baro RNAV approaches do. But even GPS precision alone is not enough in this case and you need WAAS.
Radio altimeter can give much better precision.