Makes sense. Though again, that's not exactly breaking the back of an existing monopoly. Frankly if you wanted to do direct research funding the obvious mechanism would be just to increase the direct grants paid right now, which are going to existing university faculty.

I think you and the grandparent both seem to be arguing that "removing the undergraduates and sending them to MOOCs" will somehow change the character of the way "academia" works, and that's what I just don't see. Undergraduates are a side project at these schools -- as mentioned, they don't provide meaningful funding (tuition breaks even at best). And at most, they provide a cheap labor pool for the research programs. Take them away and you'd never notice the difference.