In principle, this could work if the school maintained high standards and allowed everyone to attempt to pass their courses + eventually attain the degree. Having an online platform without limitations (or with less limitations) in instructor resources allows legitimate programs to pursue this model.

To my knowledge, the difference with for-profit schools is that you are essentially guaranteed a degree by enrolling and paying the tuition and fees. If the for-profit institution actually had a good reputation, I can imagine they could also implement more restrictive policies. But the way academia works, a large part of prestige comes with history - and this makes it nearly impossible for new schools to break into this echelon of elites. I suspect it's also for the same reason that for-profit schools are not able to consistently attract talent in terms of instruction, since the ones who can would prefer to be employed by more prestigious institutions.