First of all, the MOOCs I have worked on have not focused on assessment - they have been courses, yes, with a small number (20 or so) taking them for credit, but the vast majority of participants auditing. So the question of marking term papers never came up. And like you, I would not contemplate multiple-choice exams in humanities and literature courses.
If you really need assessment, a few solutions have been proposed and, to a limited extend, tried out:
Via Kim Flintoff, LaiaJoana