The world is full of people who have university degrees, and most of them end up doing mundane jobs, I think in reality it is very hard to beat decent on the job learning backed up with day release college courses, that way when you get your passes and certificates , you actually know a hell of lot more than just the theory, also know how to put that theory into practise.
It depends on what the job entails. Your suggestion is appropriate for people slotting into working with existing products/technologies/application domains. It is unlikely to be very successful if one or more of those are novel, or just new to a company.
In the fun interesting places that I have worked, this has
always been what interviewers (I've been on both sides of the table) have been looking for...
Indeed. I'm recruiting at the moment and I can't find anyone who knows what they are doing qualified in any way or another. So I have to look for people who have the initiative to get from zero to knowledgeable on their own or with assistance.
Such bootstrapping usually requires a sufficient knowledge of the fundamental theory, so that it can be applied to new circumstances.
Such employees tend to be good long-term employees since they will adjust to the changing requirements over the years. After all, the half-life of specific "which button do I press" knowledge is a couple of years.