I was curious to find out how Direct-Entry nursing programs operate in states other than Wisconsin, so I randomly chose another program similar to Marquette's and did some research on it.
Vanderbilt University is located in Nashville, Tennessee, and offers a 3 year program similar to Marquette's. Vanderbilt's web site says that the pre-MSN portion of their program prepares "students for the NCLEX exam to become a Registered Nurse (RN) and provides the foundation equivalent to the bachelor's degree in nursing." I don't know for certain, but I would guess that this implies that they do not grant a degree to their students when they complete the first portion of the program although they are able to become RNs.
Let me preface this by saying that I am not a lawyer, and I don't know much about the law. This is totally new territory for me. As a pretty much completely uninformed layperson I was able to find the Tennessee Nurse Practice Act on the web. The section related to the licensing of nurses states that it is required that an RN applicant:
has successfully completed a course of study in an approved school of nursing, as defined by the board, and the applicant holds a diploma or degree from an approved school of nursing, or the approved school has certified to the board that the applicant has met all requirements for a diploma or degree.
(Emphasis mine) It looks like it is perfectly legal for Vanderbilt students to become RNs even though they are not issued BSNs.
Compare this to the portion of the Wisconsin Nurse Practice Act that deals with requirements to sit for NCLEX:
Any person who has graduated from a high school or its equivalent as determined by the board, does not have an arrest or conviction record . . . holds a diploma of graduation from an accredited school of nursing, and if the school is located outside this state, submits evidence of general and professional educational qualifications comparable to those required in this state at the time of graduation may apply to the department for licensure by the board as a registered nurse, and upon payment of the fee . . . shall be entitled to examination.
(Emphasis mine again) To me it appears as though the procedure that Vanerbilt and Marquette follow with their Direct-Entry programs (having students become RNs without issuing them a degree) is perfectly legal in Tennessee but not in Wisconsin.