I completed my MS in Mechanical Engineering through Kansas State through the distance learning program. Kirby, probably a lot of your frustration had to do with taking a 700 level class as an undergraduate. I took a 700 level class as an undergraduate and a lot of it I didn't understand until I was partway through my MS with some more supporting background. Granted, during my MS I did have to sit through watching several lectures where it was very difficult to stay awake. The nice thing about watching a recorded lecture was that I could re-watch portions I didn't understand or needed a little more reinforcement.
The distance learning graduate program is non-thesis but you do have the option of a master's report, which is a detailed evaluation/writing project which is on the order of a thesis in length, just without the independent experimentation. If you are not going on to a doctoral program, or working in a job that requires experimentation, I believe the experimentation/thesis is a waste of time when you can be learning other more useful information. I had exactly the same homework as the students "on-campus". I took exactly the same exams and I had to meet before my master's committee to discuss my final report and they had the option to ask me questions about anything I was supposed to have learned over the course of my studies, which they did.
I think, perhaps wrongly, that when you say the words "online degree", most people think of the non-accredited, non-brick and morter schools that offer online degrees in any area you can think of (no names offered but we all can name a few). The truth is there are many reputable universities that now offer degrees through distance learning means (online, dvd, etc.). These are very beneficial for people who want to further their education but cannot take a year or two off to go to school part time, usually far away from where they live. I agree that you do not get the laboratory experience through distance learning, but there are many programs that do not require laboratory work and many, many more careers where you will not step foot in a laboratory. I would much rather have an extra class or two in advanced fluids or thermodynamics (which I might use) than to have spent a semester wasting time on developing a hypothesis and testing that hypothesis with experiments, simply because I will never use that knowledge/information. Certainly, if I were going on to get a doctorate or work in a national lab or something, the experimentation and thesis would be very beneficial (but then I probably wouldn't have been considering a distance learning degree in the first place).
So bottom line is, those who say it's not the same thing or that one thing is more reputable than the other either don't understand or haven't experienced distance learning. At the MS level, you can learn just as much, or more, than being on campus. You also learn discipline and self-study techniques because you are responsible for making sure you learn the materials to complete the homework and exams. I think the experience has helped me immensely in my career.