Yeah, that is exactly the problem traditional educational institutions will have with it.
One thing is this stuff does not change, mathematics, chemistry, biology, book keeping, etc really has not changed. A very good book and video lecture should be as good in 20 years as it is now. If they spend time improving and adding material instead of just ditching everything and going with new material every few years like your typical college program does, they will be able to build something incredible.
It was only a community college that I attended. But it was pretty useless. There was the books, I was expected to read them. I could buy "for dummies" books that would be better to learn from. Then there was the classroom instruction, which was repeating what the book said. If you did not understand something from the book, the instructor might help. If something in the book inspired you to ask a more advanced question. Sorry, they instructor would not answer, it might confuse the slower students. It turns out the books are there for you to read, and to provide tests to prove that you read the book. The instructors are there to proctor the tests and grade the work.
Khan does not have to do much to do better than the current system at teaching students. Since he does not have to worry about real estate, sports, trustees, textbook publishers, unions and tenure he can focus on really teaching students instead of making money for everyone vested in doing things the way it has always been done.