I've got an MS Degree in Project Management (specialized business degree) from Boston University. Nether my degree nor my transcripts show anyting about it being a distance learning program, the only way you would know is by matching up my work history to my education and realizing that I worked out of a Florida office while attending a university in Boston... I didn't have to take the GRE exam, but I did have to apply and show my transcripts from my undergrad with over a 3.0 gpa, write essays, get references, letters of recommendation, etc. In my case, I travel a lot for work, so there's no way I could actually attend a university in person. In my opinion, I thought there was more work involved with the distance learning degree than physically attending a class.
Class participation was a good percentage of our grade, which amounted to discussions on a message board, all of which had to be supported by research. You could not simply state an opinion, you had to have a certain number of references to support your statements to get a good grade. For some classes, this basically amounted to writing upwards of 15 essays a week, each with 3-5 references, on top of our other course work. This was a lot more work than simply attending class where you could just raise your hand and say whatever you wanted... Our exams were proctored and had to be scheduled in advance. Even so, I don't think that not having an exam proctored encourages cheating. It is just as easy to cheat in a classroom as it is at home. All of the exams were timed, so even if they were open book, you didn't have enough time to just look things up, you had to study and know your stuff. We also did a lot of group research projects and presentations, so you get to really know some of your peers.
I think distance education is a great way for working professionals to further their education. It's no walk in the park, but it'll be worth it once it's over.