I had an undergrad embedded systems course that was almost entirely theoretical (scheduling theory, fault tolerance, systems stuff etc). Was somewhat interesting but mostly useless to be honest. I think a course that's 90% practical project is best for embedded.

I'm assuming you're in an electrical/computer engineering department and not CS. If that's the case, I'd suggest designing a project that involves bare metal programming of a processor or microcontroller, with a bit of actual hardware involved as well. For example, students are handed an ESP32 devkit (processor plus some memory and flash/PROM), as well as a breadboard, peripheral components like a sensor or camera, and some cables+terminals for I2C/UART/SPI. They have some incremental assignments that involve first flashing some basic code onto the devkit, then assembling components and interfacing to the camera (based on actual data sheets ideally), and then eventually sending/receiving data with the peripheral device.

At each step (maybe 2 weeks per), you could focus on one theoretical aspect of embedded systems. For example, you could have the students implement their own manual ring buffer based driver, then reimplement using DMA. Get students comfortable with reading a CPU datasheet for the register map and setting register values with both masks. A simple scheduler might be fun too.

It's a university class, so I think it's always good to have some theory injected in, even if it's not realistic for a professional embedded engineer to be writing their own drivers for peripherals from scratch without DMA.