Online education can work, and it can work very well -- but there are some subjects that are just very poorly-suited for the online environment. People working at their own pace, with common due dates for written work, or people in semi-synchronous Web-based course rooms can study the crap out of business, stats, or pretty much anything that's based on researching publications and synthesizing ideas. Online can be a decent way to consult with people working in a field, people you'd never have access to in a regular night class.
But there's a big difference between doing a research project based on literature searches, and gaining new skills. You can take a Chem course online, but you can't do the lab. You can learn Stats for Health Care online, but you can't do original research. And obviously, anything needing a clinical preceptor should be done traditionally, at least until the ability to find, train, and monitor preceptors gets better.
I predict within about 5 years, there will be well-respected, online-based med-school courses, but they'll be in areas where geography is the compelling factor, and they'll be only a part of a cirriculum.