"A few unis I've seen require some sort of on campus attendance at some point. Which kind of defeats the purpose of distance learning... " I really don't think campus attendance defeats the objective at all. [my emphasis]

Methods of course delivery will vary depending on the provider. For some subjects it would be quite difficult to replicate the resources of a decent university - libraries, laboratories, access to journals that are not available online etc. Besides, although video conferencing and applications like Skype can bring people and groups together I feel there is a certain perhaps intangible benefit of working in the same room with others. Observation of teaching methods and styles can be done with video of course but I maintain that the presence of the camera may inhibit some behaviours.

If I remember correctly there was a sequence in one of the Transformers movies, where the parents of the male lead accompany him to his first day at university to help him settle in. The mother, surveying the academic buildings, says something like: " I feel more intelligent already." Intangible, maybe?