I can't begin to tell you how many times I have heard "hands-on learning works best" from a student, parent of a student, or an individual who is showing empathy towards me when they discover I work with alternative student. I agree that most of these students are not learning in the traditional classroom, but that doesn't necessarily mean they will learn hands-on project based learning either. That is, at least, not until they have been given the skills that one needs to start and complete an assignment. Project based learning in the alternative setting faces several obstacles; collaboration, basic understanding, and attendance.
Students need to understand the expectations and language of collaborative learning. Teaching students the concepts of reciprocal teaching, along with providing question cards that they can use when their stumped is a good starting point. There is also a YouTube video that describes collaboration in the real-world of Pixar, which adds another layer for discussion. The end result needs to be students who can ask questions, identify problems, collaborate with peers, create plans, and complete and share a final product.
Although project based learning is centered on the principle of inquiry, the students involved still need to have a foundation or basic understanding of the core subject. Proper grouping and differentiation can provide a group of students a starting point from which to build upon. Before grouping students a pre-test or assignment that can be used to ensure that each student is moving on to a project with the basic understanding. Using this method a teacher needs to be careful not to fall into the trap of forming homogeneous groups. Having multiple projects and multiple outcomes can also address this issue but one needs to make sure that all students show growth over time.
In the alternative setting, attendance is one barrier that as a teacher we have very little control over. Yes, we can provide an engaging education but even so we are still at the mercy of the family and friend dynamics. There is several ways to approach this. First group according to attendance patterns. Ideally the groups should be heterogeneous and supported by independent accountability measure. However, if the class is new and not strong enough to do this it may be better to build a culture of success first. This can be done by first splitting the students based upon attendance, then forming heterogeneous groups based upon performance. If the latter is chosen it is the responsibility of the teacher to grow the capacity of success with the students who do have attendance issues.
As a teacher I gravitate towards the project based learning but I also find it frustrating when it goes bad. What I have learned in regards to making "hands on learning" the best way to learn is to split the instruction between content to be learned and behaviors that promote success. Showing, not just telling, the students how to act as individuals, how to communicate with their partners, and how to share the information with others is the key to having real learning take place.