Mixed feelings.On the one hand, I think why not. The world is changing, technology is improving, why not allow it?On the other hand, I've taken a couple of online classes (from a totally reputable source), and to me the quality of experience suffered. It's difficult to replicate the experience of being in a classroom, and especially the experience of law school classes. Having to stand up in front of a room full people, making arguments on the fly, learning to control your nerves...these are all important lessons that can't really be experienced online. Does that mean that online is automatically bad? No, but I think we have to accept that it's different and (at least in some ways) lacking. Your Honor Society idea is interesting, although I'm not sure if the market exists. The target audience for online, I think, are the 130 LSAT crowd you mentioned and working adults. Anyone with a 170 is likely to want a traditional, prestigious law degree.
I definitely think that more online classes should be offered for 2Ls/3Ls. Not the core stuff, but classes like Juvenile Law, or Death Penalty, or Water Law, etc. At least at my school, those electives were usually taught by adjuncts, were small, and didn't rely so heavily on Socratic method. I think a class like that could easily be done online.
I don't think they should I think there is something to be said for the relationships that are built during law school, and learning how to show up on time, which in all honestly a huge part of actually working as a lawyer. I also think it will cause professors to lose motivation to simply talk to a screen, and not see students in person. I don't it needs to change, but that is just my opinion as a random guy on the internet.