It's definitely not possible to turn WiFi off or on with any public (documented) API.
It might be possible to achieve this even on a non-jailbroken device using private functions.
See Apple80211Functions - there is a private function called Apple80211SetPower
which is a good candidate for this job. But using it would be also interfering with automatic TX power settings - could result in either increased battery usage or decreased WiFi link quality (or both).
Of course your app would most definitely not pass App Store approval using this.
You can see how Apple80211 functions can be used if you download Stumbler source.
Stumbler SVN checkout is done by:
svn checkout http://iphone-wireless.googlecode.com/svn/trunk/ iphone-wireless-read-only
There are also two other projects that might help you start with low-level WiFi functions:
web-login-helper
BECHA
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