Adding on to Tom's post, I think there is something that is being taught very well: skills. Very rarely do I go to professional productions where the direction isn't solid, the scenery isn't interesting, the lighting isn't efficient, the costumes aren't accurate, and the acting isn't believable. (For some reason, that latter comment about acting doesn't apply to Broadway, where I have seen some absolutely awful acting. For some reason, once actors make it to Broadway, they have acquired the habit of mistaking speed, line pickup, and loudness for actual acting. I am regularly astonished at how totally unbelievable as human beings so many Broadway actors are.) Most of the artists responsible for these productions have received their training at university, and their competence reflects well on their alma maters.
I think that theatre departments are generally teaching the how-to's in a solid fashion. Yes, when I attend a college production, the quality will vary from student to student, but often that is more a function of the student's progress within the program more than anything else.
And I agree with Tom -- there is a lot of good mentoring going on. The larger the department, the harder it is for that mentoring to take place, but in medium-to-small departments, or in graduate programs, this is much more likely.
I would also like to link to this post by David Boevers at Carnegie Mellon, whose program, from Prof Boever's description, has benefited from a strong effort to break out of the traditional skill-based training in order to make an intentional attempt to actually educate artists. This is particularly impressive, in my opinion, because as a recognized high-profile program Carnegie-Mellon could have coasted on its reputation without going through the intense reflection necessary for such a curriculum change to occur. I am particularly taken with the OSWALD class, which takes an intentional approach to questioning the generally accepted. It is always nice to be able to point at a department that seems to be making a real effort.
So within a very narrow frame, I think most university programs are turning out competent practitioners.
If that seems damning with faint praise, well...mea culpa.