No, the problem is as trivial as he said; it's just that the original plan seems to have been much more grandiose. Come to think of it, if they *had* gotten the funding to send a DVD to every school in the country, wouldn't we be getting a story long the lines of "Congress Doesn't Know Internet Exists!!!"
Those headlines would be as cluelessly inflammatory as a typical kdawson post.
Making something available to everyone != Delivering it to everyone. One approach results in a much, much higher rate of adoption.