It's a gutsy move that is not without risk. Tech's tuition revenue could fall unless the number of students increases rapidly. That's a scenario that bothers me, too: the job market in the U.S. is already flooded with too many MBAs and JDs. Graduate degrees in engineering, for the most part, have been immune to that type of supply-and-demand imbalance. MOOCs could upset that.
But much of the opposition arises from within the university setting. Professors worry that they will lose their jobs -- or at least that their Ph.D. students will not be able to find jobs. A related risk is that grading and other interactions between students and the institution will be handed to adjunct faculty or other graduate students. Looking back at my own experience in grad school, that might or might not be a problem. For three years I taught ICS 4380, Data Communications, at Georgia Tech as an adjunct faculty member. I believe that I did a pretty good job. Surveys said that I did.