Handle it, yes it could.
Should it? I'd personally say no, simply because I (selfishly) want improvements made to be exclusive to the latest chipsets. The A7 and A8 are the only chips which utilise every aspect of iOS 8 (Metal, etc).
Older chipset support presents baggage that affects performance, and I'm fed up with older devices holding back newer ones. It's time to move on. Just my view.
There is no proof that dropping older devices would improve performance on newer ones, in fact the opposite appears to be true. New updates slow down older devices and cater to new ones. I think having less powerful devices stops Apple from making the OS too bloated. For example iOS 6 worked more smoothly because the groundwork that it used was from iOS 1 which had to run well on the original iPhone.
With iOS 7 the software ran well on the A6 and up while not running the best on A4 or A5. But now iOS 8 is a more feature packed update and that, plus the design of iOS 7 has resulted in an OS that isn't always as smooth or snappy as iOS 6.