If it is isothermal, the internal energy will change with changes in pressure and then B's law will not strictly apply.
From Cambridge University Press:
With respect to the Bernoulli equation, the main difference between a compressible and incompressible flow is that the variations in the pressure in a compressible flow will result in compressions and expansions of the fluid blob as it moves along its own path. If the blob were stationary, the work done by the compressions and expansions would be converted to and stored as internal energy, at least if there is no energy loss during the compressions and expansions. In general, the internal energy is comprised of both thermal energy and energy associated with the intermolecular forces, although it is simply proportional to the temperature in the perfect gas model. Thus, in a compressible flow, energy must be exchanged not only among the kinetic energy and the potential energies due to gravity and pressure, but also with the internal energy. Because the energy principle used to derive the incompressible form of the Bernoulli equation only accounts for the mechanical energy, the (independent) law of conservation of energy must be employed to completely describe the energy exchange in a compressible flow.
Ref: http://www.fluidmech.net/tutorials/...e-bernoulli.htm
In other words, when applying the Bernoulli equation with the incompressible assumption, only kinetic and potential energies are exchanged. The incompressible form of Bernoulli's equation only accounts for this mechanical energy. The internal energy does NOT change along any streamline.
You could also derive this knowing the density is constant and the enthalpy is constant.
Since H = U + PdV,
where H = Enthalpy
U = Internal Energy
PdV = Density change
and since H and PdV is constant, then U is also constant.
If the system is isothermal, there will be a net increase in entropy.
I disagree. If the system is incompressible (ie: constant density), and there is no change in internal energy as described above, the following fall out:
1) The system is isothermal
2) The system is isentropic
3) The system is isenthalpic
4) The system is adiabatic
Note that this version of Bernoulli's equation is very simple in terms of the assumptions it makes. Perhaps that's why it seems so counterintuitive, because it is not very realistic in its assumptions.
Check the following references, they all refer to this type of flow as isentropic:
http://www.grc.nasa.gov/WWW/K-12/airplane/isentrop.html
http://astron.berkeley.edu/~jrg/ay202/node87.html
http://astron.berkeley.edu/~jrg/ay202/node91.html
http://www.fluidmech.net/tutorials/bernoulli/compressible-bernoulli.htm
http://www.fluidmech.net/tutorials/bernoulli/assumptions.htm