Been meaning to respond to this...
Domain knowledge is exactly the part that needs to change. The current "publishing" domain experts are very likely long-term employees of the existing publishers and they "see" content in a textbook fashion. They probably know they have X words, Y images, and have to convey Z elements in each chapter. I doubt publishers ever reach out to actual domain experts.
In my vision, I would have had experienced interactive authors work with actual domain experts and educators to develop stories that included XYZ, but also the additional depth that a story can provide.
One of my education advisers was an established history teacher in Illinois and he basically said he stacked the textbooks at the front of the class and never used them. Every day he would tell a story and provide his own materials. He considered the textbooks a huge waste of time and provided very little in the way of usable knowledge.
I could pull together a half dozen interactive writers for under a million a year. Engaging with domain experts would be challenging, but not without funding to trade. Add education staff, programmers, testers, and a group of parents and students for outreach and you have a solid group to develop something profoundly different and likely significantly better than what the average 3rd through 8th grade student endures.
Textfyre was way ahead of its time. Many people told me that and I still don't know how to fund it. It would require someone or some entity that thought it was a valuable effort.
I'm on my third startup and I've often told people, if I ever hit it big with one of my ideas, I am likely to swing back to Textfyre and bootstrap it.