Honestly, I think the biggest limitation in training at a Gracie Garage with the online curriculum is much more the quality and quantity of training partners rather than the absence of an in-person instructor.
Obviously, having a good instructor on hand to provide nuanced feedback is extremely helpful. (As a BJJ black belt who is working hard to be a good instructor, I would say that.
) However, the honest truth is that there are plenty of instructors out there who are terrible at providing detailed individual feedback, even though they may be skilled practitioners. Somehow they still often manage to produce competent students. Furthermore, there are professional fighters who started out leaning jiu-jitsu from video tapes. Heck, the Gracies themselves started out with minimal instruction and mostly taught themselves.
The Gracie University instructional videos not only go far beyond what most instructors ever show in terms of technical detail, they also place the individual techniques in context of the larger art, clearly explain core concepts and principles, and repeatedly go over how to train and drill most productively and how to be a good, safe, helpful training partner.
If you have a Gracie Garage with a good sized training group full of dedicated, disciplined students, preferably at least some with a decent degree of athletic talent and maybe some prior wrestling or martial arts experience, then I have no doubt you could turn out some solid blue belts following the online curriculum. GU has posted some video of students that backs up my opinion on that. (I also personally know one GU blue belt who is totally deserving of the rank. That said, he has spent at least a little time training at actual schools.)
The problem is, most online students will not have a large group of talented, disciplined training partners. If it's just you and your spouse or your couch-potato neighbor, then you are highly unlikely to develop more than the ability to demonstrate the techniques on a compliant partner at best.
I've learned some good things via direct feedback from an instructor. I've learned a whole lot more via the feedback of grappling hundreds of training partners - jiujiteiros, judoka, wrestlers, samboists, MMA fighters, karateka, big guys, little guys, super-strong guys, super-flexible guys, super-fast guys, aggressive guys, sneaky guys, young folks, old folks, and more. Most people training online won't have that opportunity.
As far as the online promotions go ... the no-stripe blue belt isn't such a big deal, because it seems to match the promotion criteria for students training in person at the Gracie Academy. That rank is based not on sparring skill, but on demonstrated competence in the basic Gracie Combatives ("self-defense") curriculum. My understanding is that Gracie Academy white belts don't even spar. (They do practice "reflex development drills" which are only semi-free form and are focused on developing specific skills.)
I would have a larger issue with promotions beyond that point that are supposed to represent a certain degree of sparring skill (among other things). I think that would be a lot harder to evaluate based on a single video. I think they made the right decision to require in-person evaluations for the higher belts.
