Why can't I use IPX routing instead of tunneling the IPX in TCPIP on the line ?

You should be able to use IPX routing and the only reasons you may not be capable of communicating are:

1.) The Networks have identical Network IPX Numbers for Protocols 802.2, 802.3, and etc..
2.) The Routers have not been configured properly with a WAN IPX number that must match on both routers and differs from the External Networks.
3.) The Routers have identical name for the Router name. (FYI:Rename each, away from the default.)
4.) Identical License will also yield similar problem, however, this would be displayed on the server console.
5.) Bridging or Spanning Tree is Enabled.

Confirm all network numbering(including the WAN). All networks MUST BE UNIQUE.