One of my instructors, a pro MMA guy who has opened my eyes up to totally new ways of training let me in on a secret.
He said, do privates.
I said, wow they are expensive.
Bingo, martial arts are best taught in SMALL groups. The two places I train now are less than 12 members total, frequently less than 8 people in class at a time. You cannot get lost in the crowd, almost every class is effectively a private lesson, particularly since most of us are good enough at knowing what should be going on that we can offer very high quality feedback, you know like, "Dude, that REALLY sucked..."
As much as I miss the juice of a big dojo and community, I do not think it works well for transmitting budo.