“How are lecture classes with hundreds of students currently graded?”
Graduate students or qualified undergrad TA’s, both working under the supervision of the professor.
I haven’t taken any MOOCs, but I seem to recall from browsing through them that any grading was being done by fellow classmates. Just my recollection. But unless you are going to move to an entirely multiple choice exam format and provide proctored testing centers at many locations, there isn’t any practical way for a MOOC provider to assess 10,000 students.
I also didn’t say that online instruction cannot be done well, though I think it’s more difficult than most people assume. But the question being asked is why it’s often not as respected. I think it’s largely a matter of trusting the assessment.