Tutoring, office hours, teaching assistants. One of the best classes I took was a "studio style" class where we would work on a project and occasionally the teacher or a TA would interrupt and give a brief lecture or demonstration based on a "teachable moment" that had occurred.

You are selling a diploma. Some universities also sell some degree of attestation to the high resilience of their graduates. And of course the space to network. Good teaching is not on the list in my experience.

In general university lectures are horrible (of course there are exceptions). The lecturures oftentimes are required to teach as a condition of research funds, so for many it's not a priority anyways. On top of that most couldn't care less if their teaching style is didactically sound at all.

Yes. You've described the problem very well

?? The model is to flip the roles, not to eliminate in-person teaching. The product is in-class homework and at home "lectures". I'm not saying this is appropriate for everything, but seems it would be useful for mathematics at some level.