No it's not possible to make a leteral move in the airline industry (unless of course, you're talking about year one), however, there are risks with either route. Yes, it's possible to move to other jobs/cities, etc with potentially no downside in pay, benefits, QOL, etc. outside of the 121 world, however, don't always think it's easy to do this or even find a job in an economy similar to the one we have now. I can't tell you how many friends who have gone through rollercoaster careers having been fired, furloughed, downsized or even leaving to chase a "better deal." Many of these guys are smart, motivated, etc, but some were simply victims of being in the "wrong place at the wrong time."
In our annual gathering (including spouses, more than a few were quite envious (spouses too) of the relative stability and job protections which come with a 121 seniority list. They understood UAL/CAL, pensions going away, but all in all, they generally agreed that the long term stability/job protections to at least age 60 was worth the risk. As they said, losing a job with kids after 50, especially in this economy, is darn near unrecoverable.