The point of a college degree is that you have a document, form an accredited university, that represents that you have completed a course of study in a satisfactory way. As an employer hiring a new grad, you know, at a minimum "This person showed up to class for four years. They are capable of following instructions, of learning new material, and doing so above a baseline level of competency."
What does an employer get in your scenario? Four years of 'projects' to sift through? How do they know what a good deliverable looks like for a CS 61A class at Southeastern Louisiana State University?
No grades works great at Yale Law, when you're dealing with a group of the most talented and motivated young people on the planet. That will not work in a mass education system, where the need to make the grade is the only thing getting half of the kids out of bed in the morning.