i, personally, am working on getting my bachelor's degree online and i love it. it is really the only way that i could do it right now with my schedule. having said that, you're not talking about college. you're talking about basic education, right?
I'm not a teacher and I don't have kids of my own, so I don't know how to actually teach. I do have Mary Prides Complete Guide to Getting Started in Homeschooling, but that only gives hints of the real thing. What I do know from my experience with Moodle, which is just one tool, of course, is that you can have several methods of learning / teaching in it. You might have (timed) examinations, multiple questionnaire, assignments, grading, group forums, online chat and so on. I know, that university aged students like it very much as you can do things when the suit you best. But yes, I think it suits best for basic things and is never a replacement for face-to-face education.
we hope to send our children to a private school, but doubt that we can afford it so we will probably homeschool. i think that it would be awesome to have online classes and teaching tools available for our children, especially for subjects about which my wife and i don't know a whole lot.
This is what I was after. Lets suppose you don't know much about atoms. With online education, and in Moodle for example, you could actually get someone who knows about it write up some basic teaching material, or at-least verify it, and then you could educate your children with that information by using examinations and assignments. But someone has to do the courses, the material. You have the technology, but without information it's useless.
Online education is not much more than a tool, but properly used it could help a lot homeschoolers.