Is galvanic isolation of Hi-speed USB impossible?
There are definitely laws of marketing involved.  :-)

Gigabit Ethernet and 10G-Ethernet have galvanic isolation.  So, obviously it is possible and routinely done with today's technology.

A fiber-optic USB extender basically works a bit like an opto-coupler except that the light source and the light receiver are on separate chips.  Combining the functions of a fiber extender into a single package should be cheaper, not more expensive.  Using magnetic or capacitive coupling instead of optical coupling should be cheaper again.

USB is normally used for short distance (up to 5m) data connections where significant differences in ground potential do not exist and galvanic isolation is unnecessary.

There are a few applications, e.g. medical or low electrical noise, which require or benefit from galvanic isolation.  All of those applications are specialized and the existing fiber extender solutions fully cover the galvanic isolation requirement.
Additionally, wireless solutions like Bluetooth, Zigbee, etc also satisfy the isolation requirement (at slow speeds). In conclusion, there is probably not much of a market niche for USB isolators.

FWIW, I have used a fiber extender a few years ago during development work on a high voltage power supply sub-system.  I only needed the isolation, the fiber remained coiled up on the bench.

Thanks for the links.

Edit:
As for the part of the question "Are actual laws of physics involved, ..."
No, there are many faster, galvanically isolated communications links such as Gigabit Ethernet, 10G Ethernet and even wireless solutions.

"... or is this merely an engineering challenge or cost issue?"
Yes, as of 2018, the engineering challenge is less than it would have been a few years ago, but would still be a significant effort.  But who would fund development of such solutions if the demand appears very limited?