Top Ph.D. programs receive many applications and admit a very small number of students, and admission is extremely competitive. Most applications are from candidates whom the faculty at that school has never met, but there are a few applications from students whom the faculty do know, because such students may be undergraduates or graduate students at that institution and are seeking further study as a Ph.D. candidate. So, if you are on the faculty admissions committee, you need to choose between the "devil you know" and the "devil you don't know" -- do you choose to admit a Ph.D. student whose work you are familiar with because (s)he has already been in your classes, or do you take someone coming from far away who has a superb record on paper, but whom you've never met?
If your goal is to get into a Ph.D. program at a competitive school (say, for example, Columbia) then you would certainly become a more competitive candidate for Ph.D. admissions at that school if you were to arrive there as a Master's candidate (paying the formidable tuition out of your own pocket) and forming a close working relationship with one or more faculty members with whom you hope to do research. Obviously it would be challenging to form such a relationship if you were a distance (CVN) student, but I should think it would be feasible if you really made the effort to get to "know" the faculty, even remotely. I don't know whether innovations such as Skype video conferencing are in active use by such faculty, but such communications would obviously be a cost-effective way for a distance student to become more than just a name on a roster.
Note that at Columbia, especially well-qualified MS candidates are permitted to take some Ph.D. level courses (those with course numbers in the 6000 and 8000 range) in addition to, or instead of, some of the Master's level courses (those with course numbers in the 4000 range.) Note that very few of these upper-level courses are offered through CVN -- most of these have very small enrollment, so the numbers just don't make sense for the video overhead. Of course, you would have to do extremely well in these courses in order to impress the faculty and strengthen your application to continue on as a Ph.D. candidate, because if the faculty choose to keep you on following the masters, they are making a major financial commitment to you, rather than vice-versa.
In the USA, the major distinction between Ph.D. candidates and MS candidates is money. If you arrive on campus as an MS candidate you would (in most cases) be paying the tuition(and your living expenses) out of your own pocket, even if you sign up to take all of the same courses that the incoming Ph.D. candidates take, while those Ph.D. candidates would most likely have fellowships, stipends, and tuition waivers. Of course, some people have external sources of funding, such as employers who have tuition reimbursement plans -- but such schemes usually indenture you to that employer for a specified period of time, otherwise you have a formal obligation to repay a specified portion of your tuition benefit if you choose to quit the company prematurely.
This is how (American) universities fund such programs -- a large number of tuition-paying MS students provide the funds which the department uses to be able to support a smaller number of Ph.D. candidates. If you can afford the MS tuition, then it could prove a worthwhile investment. But there are many bright people for whom the only way they can afford such education is if they are fully funded, which happens only at the doctoral level. That is why admission into the Ph.D. programs is so competitive.
Best of luck!