Yeah, there's a correlation != causation problem with weak students who tend to miss class being the ones who most need it, but the overall idea of class doing things that can't really be done otherwise still holds. There are also a certain number of students who say or believe, "I'm already a good writer; I don't need to take a composition class." Out of the ~300 I've taught, that's probably been true of one to five, or so, but far more seem to have believed it.
A school like the one listed sounds great. It also sounds like it'll work best for the highly motivated. One problem with the HN posts about how universities are wasteful, unnecessary, and so on, is that a pretty small percentage of people are willing to do university-caliber work without the structure of the university. HN posters tend to forget about the other 97% of the world. I tend to see them, and so do a lot of other teacher / prof types.
I'm not saying that lecturers are no longer competent at the stuff they teach, or that they aren't great authorities on something, but they don't have the edge that they used to.
If you want to understand the cutting edge of a field, you go to conferences, and listen to top researchers talking about their field. Perhaps that's what undergraduate lecturers used to be. But research gets more specialized and eclectic every year, while the foundations become more firmly bedded down.
Undergrad education is mostly a solved problem. Courses don't change much from year to year, except the useless faddish ones. New research gradually seeps down, but it's rare that you need an expert to bring it all together.
edit:
I was a TA for early CS classes. Sometimes we took attendance, sometimes we didn't. When we did, more people showed up, and more people passed. Teachers have a responsibility to teach both sides of the bell curve, and generally pressuring people to learn helps the lower side pass. I understand that it's kind of old fashioned and authoritarian from the perspective of a top student, but it really winds up better for the bottom students in general.
1): Making N% of the grade attendance based means that students have to do even less well to fail the course.
2): For a student who would need to learn the material to pass, there is a learning benefit to attending the class. Moreover, more people in a lecture hall is going to create an impression that you do need to show up to pass.