I admit I have not personally used this method, though face-to-face grad school is a little like this. It makes sense to me that class time can be better spent in reinforcing lessons through activities rather than in giving or listening to lectures. And maybe once students see how much better classtime can be, they are willing to put forth the effort at home. I'm not sure whether students who are not willing to do traditional homework will do the advanced work required. But on the other hand, maybe those students aren't any worse off, and the ones who are willing are BETTER off.