I believe that "large scale courses can be mobilized in SOME circumstances" for "SOME" aspects of learning. The classroom model can also be useful in SOME circumstances for SOME aspects of learning. The AU continuous study model is the same. I would suggest that having MOOCs is the way to ENABLE small group learning in a fiscally responsible manner. They are not mutually exclusive but complementary.   If we have one prof with thousands of students in one course (or for part of a course or courses), this can release other profs to work with students in small groups.
200 profs   10 000 students  (1:500 ratio)
1 MOOC for all
199 profs each have c. 50 - 60 students each. (6 classes of 10 students or 3 classes of 20)
Add in student mentors and teaching assistants.

MOOCs do not present an "either/or" proposition but rather a "both/and" one. They can complement rather than replace traditional small group models of learning (if they exist any university nowadays). And, we can have public non-profit MOOCs in opposition to the corporate MOOCs, such as the OERu initiative that AU is part of.

Profs get small classes and the government saves money.

There is little research evidence that classroom-based learning is better for learning critical thinking skills than mass courses. Both require dedication and effort. Nor is there evidence that training does a worse job of teaching critical thinking skills. Part of the training in many corporations focuses heavily on critical thinking. And, why would corporations be expected to support their employees for anything but training? They have their role to play in the economy. Let them do the training and leave universities to do the educating.