Is there likely to be future legislation relating to e-reserves?
It certainly is possible, but it appears more likely that there will be litigation involving e-reserves rather than legislation. This is mere speculation, however.
Is a teacher allowed to print anything from the web and make copies to distribute to his or her students?
Yes, within the boundaries of fair use and the Guidelines on Multiple Copying for Classroom Use. There are word and other limitations within the guidelines as well as the one-term restriction on use. Another alternative is simply to provide the students with a link to materials on the web which entirely avoids printing and distribution by the teacher.
Is there a grandfathering clause with respect to items that one has used for a number of years?
Unfortunately, no, and the teacher should seek permission now. In doing so, however, it is not necessary to admit that the instructor has used the same material for a number of years.
What issues are there for students printing material from a password protected course?
None. The real issues involve whether and under what conditions the teacher may make the material available to the students so that it may be downloaded or printed. If this is done correctly, then when a student either prints or downloads the material, it is not infringement.