(1) There have been quite a few online learning (aka distance learning) degree courses from reputable universities for some time. For MSc / Master degrees until recently they all required at least some in-person workshops (normally 1 week long - for a MSc in the UK afak 6-8 sometimes 12 weeks over 2 years). These workshops were there for the benefit of the students (networking, group work / access to profs in person, socializing, campus feeling etc.) and various other requirements (e.g. degree requirements). The outcome of these degree programs was normally the same degree that you would have received for taking all courses on campus.
(2) All universities that have offered online degrees without in-person workshops in the past differentiate / protect their higher priced and more strongly access-limited on-campus degrees by providing different degrees - GaTech does the same here - after successfully completing this course you will receive an OMS in CS from GaTech not a MS in CS from GaTech. It is to be seen if this will be received differently in the industry (as this was with such degrees in the past) or we finally are getting to a change here.
(3) The course will start Fall 2014. I would be surprised if EdX and/or Coursera will not soon announce something similar.
(4) From the FaQ it looks like ATT is sponsoring the course creation etc. with US$2M.