I think Alex's argument is spot on and the follow-up comment by Roger Meiners that the large state schools are the ones most likely to undergo significant change is also correct. It seems to me that technology offers an excellent substitute, at much lower cost, to large, or even medium-sized, lecture courses.
Another follow-up comment suggests an important function of large lecture classes, maybe even universities as a whole, is to help students find mates. This is interesting. I don't know that he wrote it down, but I heard Armen Alchian say in class that it was very hard to ascertain how the enormous tuitions at Ivy League-type schools were justifed by education, alone. He stated that he thought most of the value was from helping talented and motivated students find other talented and motivated people to marry.
More on education: a brief summary of intense discussions among the Harvard faculty about reform of the undergraduate curriculum is here. Among a lot of dopey platitudes, there are a few nuggets, such as this:
Mallinckrodt professor of physics Howard George, himself a House master (Leverett), extolled Harvard as a place where students can learn from each other and from the broad faculty and other resources, and pleaded that its strengths not be damaged in curriculum reform. Given the students' strengths, he said, echoing Charles Rosenberg, they "are worth trusting" in their curricular choices. The Core, he said, served most students well, but only annoyed the best ones; better for them to take a serious minor in a field far apart from their concentration.
Amen. (What's with all this agreement? Is the Door going mainstream [shudder]?)