diff --git a/tests/model_executor/model_loader/test_reload.py b/tests/model_executor/model_loader/test_reload.py
index d031eafe8087..6fcb077c1c73 100644
--- a/tests/model_executor/model_loader/test_reload.py
+++ b/tests/model_executor/model_loader/test_reload.py
@@ -148,60 +148,3 @@ def test_reload_weights(base_model, mul_model, add_model, tp_size, vllm_runner):
         mul_perp = llm.generate_prompt_perplexity(["3 4 = 12"], mask=["3 4 ="])[0]
         add_perp = llm.generate_prompt_perplexity(["3 4 = 7"], mask=["3 4 ="])[0]
         assert add_perp < mul_perp
-
-
-@pytest.mark.parametrize("tp_size", [2])
-@pytest.mark.parametrize(
-    "base_model,mul_model,add_model,quantization",
-    [
-        (
-            "Qwen/Qwen3-0.6B",
-            "inference-optimization/Qwen3-0.6B-debug-multiply",
-            "inference-optimization/Qwen3-0.6B-debug-add",
-            "fp8",
-        ),
-        (
-            "inference-optimization/DeepSeek-V3-debug-empty",
-            "inference-optimization/DeepSeek-V3-debug-multiply",
-            "inference-optimization/DeepSeek-V3-debug-add",
-            "fp8",
-        ),
-        (
-            "Qwen/Qwen3-0.6B",
-            "inference-optimization/Qwen3-0.6B-debug-multiply",
-            "inference-optimization/Qwen3-0.6B-debug-add",
-            "mxfp8",
-        ),
-        # (  TODO: support mxfp4 & mla
-        #     "inference-optimization/DeepSeek-V3-debug-empty",
-        #     "inference-optimization/DeepSeek-V3-debug-multiply",
-        #     "inference-optimization/DeepSeek-V3-debug-add",
-        #     "mxfp8",
-        # ),
-    ],
-)
-def test_online_quantize_reload(
-    base_model, mul_model, add_model, quantization, tp_size, vllm_runner
-):
-    if cuda_device_count_stateless() < tp_size:
-        pytest.skip(reason="Not enough CUDA devices")
-
-    if quantization == "fp8" and not current_platform.supports_fp8():
-        pytest.skip(reason="Requires FP8 support")
-
-    with vllm_runner(
-        model_name=base_model,
-        quantization=quantization,
-        tensor_parallel_size=tp_size,
-        enable_expert_parallel=(tp_size > 1 and "DeepSeek" in base_model),
-        enable_prefix_caching=False,
-    ) as llm:
-        llm.collective_rpc("reload_weights", kwargs={"weights_path": mul_model})
-        mul_perp = llm.generate_prompt_perplexity(["3 4 = 12"], mask=["3 4 ="])[0]
-        add_perp = llm.generate_prompt_perplexity(["3 4 = 7"], mask=["3 4 ="])[0]
-        assert mul_perp < add_perp
-
-        llm.collective_rpc("reload_weights", kwargs={"weights_path": add_model})
-        mul_perp = llm.generate_prompt_perplexity(["3 4 = 12"], mask=["3 4 ="])[0]
-        add_perp = llm.generate_prompt_perplexity(["3 4 = 7"], mask=["3 4 ="])[0]
-        assert add_perp < mul_perp
diff --git a/vllm/model_executor/layers/quantization/fp8.py b/vllm/model_executor/layers/quantization/fp8.py
index 9e717da43fbd..e01148313eb7 100644
--- a/vllm/model_executor/layers/quantization/fp8.py
+++ b/vllm/model_executor/layers/quantization/fp8.py
@@ -73,9 +73,7 @@
     cutlass_fp8_supported,
     normalize_e4m3fn_to_e4m3fnuz,
 )
-from vllm.model_executor.model_loader.reload.layerwise import (
-    initialize_online_processing,
-)
+from vllm.model_executor.model_loader.weight_utils import initialize_single_dummy_weight
 from vllm.model_executor.parameter import (
     BlockQuantScaleParameter,
     ModelWeightParameter,
@@ -498,8 +496,8 @@ def apply(
 
 
 class Fp8OnlineLinearMethod(Fp8LinearMethod):
-    """Online version of Fp8LinearMethod which loads a full precision checkpoint
-    and quantizes weights during loading."""
+    """Online version of Fp8LinearMethod, loads the fp16/bf16 checkpoint
+    and quantized the weights during loading."""
 
     uses_meta_device: bool = True
 
@@ -521,25 +519,84 @@ def create_weights(
         layer.orig_dtype = params_dtype
         layer.weight_block_size = None
 
+        # WEIGHT
+        def patched_weight_loader(param, loaded_weight, *args, **kwargs):
+            # track how many elements we have updated
+            if not hasattr(layer, "_loaded_numel"):
+                layer._loaded_numel = 0
+
+                # when the first `loaded_weight` is about to be
+                # loaded to `param`, materialize `param` just-in-time
+                weight = ModelWeightParameter(
+                    data=torch.empty_like(layer.weight, device=layer._load_device),
+                    input_dim=1,
+                    output_dim=0,
+                    weight_loader=patched_weight_loader,
+                )
+                _copy_missing_attrs(layer.weight, weight)
+                layer.register_parameter("weight", weight)
+                del layer._load_device
+
+            # refresh the reference to `param` to reflect just-in-time
+            # materialization
+            param = layer.weight
+
+            # load the current weight chunk
+            copy_numel_counter = CopyNumelCounter()
+            with copy_numel_counter:
+                res = weight_loader(param, loaded_weight, *args, **kwargs)  # type: ignore[misc]
+            layer._loaded_numel += copy_numel_counter.copied_numel
+
+            # if we have loaded all of the elements, call
+            # process_weights_after_loading
+            target_loaded_numel = layer.weight.numel()
+            if layer._loaded_numel == target_loaded_numel:
+                self.process_weights_after_loading(layer)
+
+                # Prevent the usual `process_weights_after_loading` call from doing
+                # anything
+                layer._already_called_process_weights_after_loading = True
+
+                # Note that we keep `layer._loaded_numel` around just in case
+                # there is logic added to vllm in the future which calls a
+                # weight loader twice - we do not want to re-initialize in
+                # that case.
+
+            return res
+
         weight = ModelWeightParameter(
             data=torch.empty(
                 output_size_per_partition,
                 input_size_per_partition,
-                device="meta",  # materialized and processed during loading
+                # materialized just-in-time in `patched_weight_loader`
+                device="meta",
                 dtype=params_dtype,
             ),
             input_dim=1,
             output_dim=0,
-            weight_loader=weight_loader,
+            weight_loader=patched_weight_loader,
         )
+        # stash the correct device for `patched_weight_loader`
+        layer._load_device = torch.get_default_device()
         layer.register_parameter("weight", weight)
 
-        initialize_online_processing(layer)
-
     def process_weights_after_loading(self, layer: Module) -> None:
         if getattr(layer, "_already_called_process_weights_after_loading", False):
             return
 
+        # deferred initialization of randomly initialized weights for the
+        # `--load_format dummy` feature
+        if layer.weight.device == torch.device("meta"):
+            weight = ModelWeightParameter(
+                data=torch.empty_like(layer.weight, device=layer._load_device),
+                input_dim=1,
+                output_dim=0,
+                weight_loader=layer.weight.weight_loader,
+            )
+            _copy_missing_attrs(layer.weight, weight)
+            layer.register_parameter("weight", weight)
+            initialize_single_dummy_weight(layer.weight)
+
         # TODO(future): support block_quant in online quant path
         assert not self.block_quant
 
@@ -788,6 +845,9 @@ def _setup_kernel(
             )
 
     def process_weights_after_loading(self, layer: Module) -> None:
+        if getattr(layer, "_already_called_process_weights_after_loading", False):
+            return
+
         # Allow for accessing weights and scales in standard way.
         w13 = layer.w13_weight
         w2 = layer.w2_weight
@@ -832,6 +892,9 @@ def process_weights_after_loading(self, layer: Module) -> None:
             layer, w13, w2, w13_scale, w2_scale, w13_input_scale, w2_input_scale
         )
 
+        # Prevent duplicate processing (e.g., during weight reload)
+        layer._already_called_process_weights_after_loading = True
+
     def maybe_make_prepare_finalize(
         self,
         routing_tables: tuple[torch.Tensor, torch.Tensor, torch.Tensor] | None = None,
@@ -950,12 +1013,86 @@ def create_weights(
         layer.orig_dtype = params_dtype
         layer.weight_block_size = None
 
+        # We are doing online quantization, patch the weight loaded
+        # to call `process_weights_after_loading` in a streaming fashion
+        # as soon as the last weight chunk is loaded.
+        weight_loader = extra_weight_attrs["weight_loader"]
+        # create a new holder to prevent modifying behavior of any other
+        # objects which might depend on the old one
+        new_extra_weight_attrs = extra_weight_attrs
+
+        def patched_weight_loader(param, loaded_weight, *args, **kwargs):
+            # add a counter to track how many elements we have updated
+            if not hasattr(layer, "_loaded_numel"):
+                layer._loaded_numel = 0
+
+                # save the ids of original w13 and w2 so that we can
+                # distinguish which one `param` should map to further
+                # down in this file
+                layer._w13_weight_orig_id = id(layer.w13_weight)
+                layer._w2_weight_orig_id = id(layer.w2_weight)
+
+                # when the first `loaded_weight` is about to be
+                # loaded to `param`, materialize `param` just-in-time
+
+                w13_weight = torch.nn.Parameter(
+                    torch.empty_like(layer.w13_weight, device=layer._load_device),
+                    requires_grad=False,
+                )
+                set_weight_attrs(w13_weight, extra_weight_attrs)
+                _copy_missing_attrs(layer.w13_weight, w13_weight)
+                layer.register_parameter("w13_weight", w13_weight)
+
+                w2_weight = torch.nn.Parameter(
+                    torch.empty_like(layer.w2_weight, device=layer._load_device),
+                    requires_grad=False,
+                )
+                set_weight_attrs(w2_weight, extra_weight_attrs)
+                _copy_missing_attrs(layer.w2_weight, w2_weight)
+                layer.register_parameter("w2_weight", w2_weight)
+                del layer._load_device
+
+            # refresh the reference to `param` to reflect just-in-time
+            # materialization
+            if id(param) == layer._w13_weight_orig_id:
+                param = layer.w13_weight
+            elif id(param) == layer._w2_weight_orig_id:
+                param = layer.w2_weight
+
+            # load the current weight chunk
+            copy_numel_counter = CopyNumelCounter()
+            with copy_numel_counter:
+                res = weight_loader(param, loaded_weight, *args, **kwargs)  # type: ignore[misc]
+            layer._loaded_numel += copy_numel_counter.copied_numel
+
+            # if we have loaded all of the elements, call
+            # process_weights_after_loading
+            target_loaded_numel = layer.w13_weight.numel() + layer.w2_weight.numel()
+            if layer._loaded_numel == target_loaded_numel:
+                self.process_weights_after_loading(layer)
+
+                # Prevent the usual `process_weights_after_loading` call
+                # from doing anything
+                layer._already_called_process_weights_after_loading = True
+
+                # Note that we keep `layer._loaded_numel`,
+                # `layer._w13_weight_orig_id` and `layer._w2_weight_orig_id`
+                # around because if EP is on, weight loaders for non-local
+                # experts will run but not actually copy any elements, and we
+                # need to not re-initialize in that case.
+
+            return res
+
+        new_extra_weight_attrs["weight_loader"] = patched_weight_loader
+        extra_weight_attrs = new_extra_weight_attrs
+
         # WEIGHTS
         w13_weight = torch.nn.Parameter(
             torch.empty(
                 num_experts,
                 2 * intermediate_size_per_partition,
                 hidden_size,
+                # materialized just-in-time in `patched_weight_loader`
                 device="meta",
                 dtype=params_dtype,
             ),
@@ -969,53 +1106,91 @@ def create_weights(
                 num_experts,
                 hidden_size,
                 intermediate_size_per_partition,
-                device="meta",  # materialized and processed during loading
+                # materialized just-in-time in `patched_weight_loader`
+                device="meta",
                 dtype=params_dtype,
             ),
             requires_grad=False,
         )
         layer.register_parameter("w2_weight", w2_weight)
         set_weight_attrs(w2_weight, extra_weight_attrs)
+        # stash the correct device for `patched_weight_loader`
+        layer._load_device = torch.get_default_device()
 
         # BIASES (for models like GPT-OSS that have biased MoE)
         if self.moe.has_bias:
+            # Use the original weight_loader (not patched) for biases
+            orig_extra_weight_attrs = dict(extra_weight_attrs)
+            orig_extra_weight_attrs["weight_loader"] = weight_loader
             w13_bias = torch.nn.Parameter(
                 torch.zeros(
                     num_experts,
                     2 * intermediate_size_per_partition,
-                    device="meta",  # materialized and processed during loading
                     dtype=layer.orig_dtype,
                 ),
                 requires_grad=False,
             )
             layer.register_parameter("w13_bias", w13_bias)
-            set_weight_attrs(w13_bias, extra_weight_attrs)
-
+            set_weight_attrs(w13_bias, orig_extra_weight_attrs)
             w2_bias = torch.nn.Parameter(
-                torch.zeros(
-                    num_experts,
-                    hidden_size,
-                    device="meta",  # materialized and processed during loading
-                    dtype=layer.orig_dtype,
-                ),
+                torch.zeros(num_experts, hidden_size, dtype=layer.orig_dtype),
                 requires_grad=False,
             )
             layer.register_parameter("w2_bias", w2_bias)
-            set_weight_attrs(w2_bias, extra_weight_attrs)
+            set_weight_attrs(w2_bias, orig_extra_weight_attrs)
+
+        # WEIGHT_SCALES
+        # Allocate 2 scales for w1 and w3 respectively.
+        # They will be combined to a single scale after weight loading.
+        w13_weight_scale = torch.nn.Parameter(
+            torch.ones(num_experts, dtype=torch.float32), requires_grad=False
+        )
+        w2_weight_scale = torch.nn.Parameter(
+            torch.ones(num_experts, dtype=torch.float32), requires_grad=False
+        )
+        layer.register_parameter("w13_weight_scale", w13_weight_scale)
+        layer.register_parameter("w2_weight_scale", w2_weight_scale)
+        set_weight_attrs(w13_weight_scale, extra_weight_attrs)
+        set_weight_attrs(w2_weight_scale, extra_weight_attrs)
 
-        initialize_online_processing(layer)
+        layer.w13_input_scale = None
+        layer.w2_input_scale = None
 
     def process_weights_after_loading(self, layer: Module) -> None:
         if getattr(layer, "_already_called_process_weights_after_loading", False):
             return
 
+        # deferred initialization of randomly initialized weights for the
+        # `--load_format dummy` feature
+        if layer.w13_weight.device == torch.device("meta"):
+            w13_weight = torch.nn.Parameter(
+                torch.empty_like(layer.w13_weight, device=layer._load_device),
+                requires_grad=False,
+            )
+            set_weight_attrs(
+                w13_weight, {"weight_loader": layer.w13_weight.weight_loader}
+            )
+            _copy_missing_attrs(layer.w13_weight, w13_weight)
+            layer.register_parameter("w13_weight", w13_weight)
+            initialize_single_dummy_weight(layer.w13_weight)
+        if layer.w2_weight.device == torch.device("meta"):
+            w2_weight = torch.nn.Parameter(
+                torch.empty_like(layer.w2_weight, device=layer._load_device),
+                requires_grad=False,
+            )
+            set_weight_attrs(
+                w2_weight, {"weight_loader": layer.w2_weight.weight_loader}
+            )
+            _copy_missing_attrs(layer.w2_weight, w2_weight)
+            layer.register_parameter("w2_weight", w2_weight)
+            initialize_single_dummy_weight(layer.w2_weight)
+
+        # If checkpoint is fp16, quantize in place.
         fp8_dtype = current_platform.fp8_dtype()
         w13 = torch.empty_like(layer.w13_weight, dtype=fp8_dtype)
         w2 = torch.empty_like(layer.w2_weight, dtype=fp8_dtype)
-        w13_scale = torch.ones(layer.num_experts, dtype=torch.float32)
-        w2_scale = torch.ones(layer.num_experts, dtype=torch.float32)
-        layer.w13_input_scale = None
-        layer.w2_input_scale = None
+        w13_scale = layer.w13_weight_scale
+        w2_scale = layer.w2_weight_scale
 
         for expert in range(layer.local_num_experts):
             w13[expert, :, :], w13_scale[expert] = ops.scaled_fp8_quant(
@@ -1032,8 +1207,8 @@ def process_weights_after_loading(self, layer: Module) -> None:
             w2,
             w13_scale,
             w2_scale,
-            w13_input_scale=layer.w13_input_scale,
-            w2_input_scale=layer.w2_input_scale,
+            layer.w13_input_scale,
+            layer.w2_input_scale,
         )
 
         # Prevent duplicate processing (e.g., during weight reload)
diff --git a/vllm/model_executor/layers/quantization/mxfp8.py b/vllm/model_executor/layers/quantization/mxfp8.py
index bd29f272bd10..5b4564bea31c 100644
--- a/vllm/model_executor/layers/quantization/mxfp8.py
+++ b/vllm/model_executor/layers/quantization/mxfp8.py
@@ -337,8 +337,6 @@ def process_weights_after_loading(self, layer: Module) -> None:
         w2 = torch.empty_like(layer.w2_weight, dtype=fp8_dtype)
         w13_scale = layer.w13_weight_scale
         w2_scale = layer.w2_weight_scale
-        layer.w13_input_scale = None
-        layer.w2_input_scale = None
 
         w13, w13_scale = self._quantize_mxfp8_moe_weight(layer.w13_weight)
         w2, w2_scale = self._quantize_mxfp8_moe_weight(layer.w2_weight)
diff --git a/vllm/model_executor/model_loader/base_loader.py b/vllm/model_executor/model_loader/base_loader.py
index d6c38664fde6..0e222139abc8 100644
--- a/vllm/model_executor/model_loader/base_loader.py
+++ b/vllm/model_executor/model_loader/base_loader.py
@@ -9,7 +9,6 @@
 from vllm.config import ModelConfig, VllmConfig
 from vllm.config.load import LoadConfig
 from vllm.logger import init_logger
-from vllm.model_executor.model_loader.reload import finalize_layerwise_processing
 from vllm.model_executor.model_loader.utils import (
     initialize_model,
     process_weights_after_loading,
@@ -61,6 +60,7 @@ def load_model(
             log_model_inspection(model)
 
             logger.debug("Loading weights on %s ...", load_device)
+            # Quantization does not happen in `load_weights` but after it
             self.load_weights(model, model_config)
 
             # Log peak GPU memory after loading weights. This is needed
@@ -73,11 +73,6 @@ def load_model(
                     scope="local",
                 )
 
-            # Process weights into kernel format. Note that when using online
-            # quantization, weights are (typically) quantized as they are loaded.
-            if _has_online_quant(model):
-                finalize_layerwise_processing(model, model_config)
-
             process_weights_after_loading(model, model_config, target_device)
 
         return model.eval()
@@ -91,12 +86,3 @@ def log_model_inspection(model: nn.Module) -> None:
     from vllm.model_inspection import format_model_inspection
 
     logger.info("vLLM model structure:\n%s", format_model_inspection(model))
-
-
-def _has_online_quant(model: nn.Module):
-    for module in model.modules():
-        quant_method = getattr(module, "quant_method", None)
-        if getattr(quant_method, "uses_meta_device", False):
-            return True
-
-    return False
diff --git a/vllm/model_executor/model_loader/dummy_loader.py b/vllm/model_executor/model_loader/dummy_loader.py
index 5a8b5de6f553..156071f1dae3 100644
--- a/vllm/model_executor/model_loader/dummy_loader.py
+++ b/vllm/model_executor/model_loader/dummy_loader.py
@@ -1,13 +1,10 @@
 # SPDX-License-Identifier: Apache-2.0
 # SPDX-FileCopyrightText: Copyright contributors to the vLLM project
-import torch
 import torch.nn as nn
 
 from vllm.config import ModelConfig
 from vllm.config.load import LoadConfig
 from vllm.model_executor.model_loader.base_loader import BaseModelLoader
-from vllm.model_executor.model_loader.reload.meta import materialize_meta_tensor
-from vllm.model_executor.model_loader.reload.utils import get_layer_tensors
 from vllm.model_executor.model_loader.weight_utils import initialize_dummy_weights
 
 
@@ -26,12 +23,6 @@ def download_model(self, model_config: ModelConfig) -> None:
         pass  # Nothing to download
 
     def load_weights(self, model: nn.Module, model_config: ModelConfig) -> None:
-        # materialize meta tensors as part of online quantization lifecycle
-        for layer in model.modules():
-            for name, param in get_layer_tensors(layer).items():
-                if param.device == torch.device("meta"):
-                    setattr(layer, name, materialize_meta_tensor(param))
-
         # NOTE(woosuk): For accurate performance evaluation, we assign
         # random values to the weights.
         initialize_dummy_weights(model, model_config)
diff --git a/vllm/model_executor/model_loader/reload/__init__.py b/vllm/model_executor/model_loader/reload/__init__.py
index 56a9d88ac4e4..ea0b0bc06ad9 100644
--- a/vllm/model_executor/model_loader/reload/__init__.py
+++ b/vllm/model_executor/model_loader/reload/__init__.py
@@ -21,14 +21,12 @@
 __all__ = [
     "record_metadata_for_reloading",
     "initialize_layerwise_reload",
-    "finalize_layerwise_processing",
     "finalize_layerwise_reload",
     "set_torchao_reload_attrs",
     "support_quantized_model_reload_from_hp_weights",
 ]
 
 from .layerwise import (
-    finalize_layerwise_processing,
     finalize_layerwise_reload,
     initialize_layerwise_reload,
     record_metadata_for_reloading,
diff --git a/vllm/model_executor/model_loader/reload/layerwise.py b/vllm/model_executor/model_loader/reload/layerwise.py
index 2a174673b91b..21795e63995e 100644
--- a/vllm/model_executor/model_loader/reload/layerwise.py
+++ b/vllm/model_executor/model_loader/reload/layerwise.py
@@ -28,7 +28,6 @@
     "get_layerwise_info",
     "record_metadata_for_reloading",
     "initialize_layerwise_reload",
-    "finalize_layerwise_processing",
     "finalize_layerwise_reload",
 ]
 
@@ -90,7 +89,7 @@ def initialize_layerwise_reload(model: torch.nn.Module):
         info = get_layerwise_info(layer)
 
         # Skip if the layer has already been initialized
-        if info.can_load():
+        if info.can_process():
             continue
 
         # Save current tensors for later copying
@@ -99,21 +98,15 @@ def initialize_layerwise_reload(model: torch.nn.Module):
         # Restore layer parameters/buffers onto meta device
         restore_layer_on_meta(layer, info)
 
-        initialize_online_processing(layer)
+        # Track loading progress to determine when to process/copy
+        info.load_numel = 0
+        info.load_numel_total = get_layer_size(layer)
 
-
-def initialize_online_processing(layer: torch.nn.Module):
-    info = get_layerwise_info(layer)
-
-    # Track loading progress to determine when to process/copy
-    info.load_numel = 0
-    info.load_numel_total = get_layer_size(layer)
-
-    # Wrap each parameter's weight loader
-    # Note that nested wrapping will occur for shared tensors
-    for name, tensor in get_layer_tensors(layer).items():
-        if _get_weight_loader(tensor).__name__ != "online_process_loader":
-            tensor.weight_loader = make_online_process_loader(layer, name)
+        # Wrap each parameter's weight loader
+        # Note that nested wrapping will occur for shared tensors
+        for name, tensor in get_layer_tensors(layer).items():
+            if _get_weight_loader(tensor).__name__ != "online_process_loader":
+                tensor.weight_loader = make_online_process_loader(layer, name)
 
 
 def make_online_process_loader(layer: torch.nn.Module, param_name: str) -> Callable:
@@ -125,7 +118,7 @@ def make_online_process_loader(layer: torch.nn.Module, param_name: str) -> Calla
 
     @wraps(original_loader, assigned=("__doc__", "__annotations__"))
     def online_process_loader(*args, **kwargs):
-        if not info.can_load():
+        if not info.can_process():
             # Unfortunately, some qconfigs are set up to load the same weight
             # multiple times. For example, CT_WNA16 loads `weight_shape` for
             # each of the qkv partitions. This results in layers loading extra
@@ -147,7 +140,7 @@ def online_process_loader(*args, **kwargs):
         bound_args = loader_signature.bind(*args, **kwargs)
         bound_args.apply_defaults()
 
-        # Buffer loaded weights, track loading progress
+        # Cache loaded weights, track loading progress
         info.loaded_weights.append((param_name, bound_args))
         num_loaded, ret = get_numel_loaded(original_loader, bound_args)
         info.load_numel += num_loaded
@@ -170,26 +163,19 @@ def online_process_loader(*args, **kwargs):
     return online_process_loader
 
 
-def finalize_layerwise_processing(model: torch.nn.Module, model_config: ModelConfig):
+def finalize_layerwise_reload(model: torch.nn.Module, model_config: ModelConfig):
     """
-    Apply processing to any layers which were not layerwise processed during loading.
-    This includes attention layers and layers which have weight elements which are not
-    loaded (due to padding).
+    Remove the outermost layer of weight loading wrappers.
 
     This function should be applied after `initialize_layerwise_reload` is applied
     unwrap the layerwise weight loaders.
 
-    :param model: model to finalize processing for
-    :param model_config: config needed for applying processing to attention layers
+    Also processes Attention/MLA layers, which must be processed after all other layers
     """
-    if hasattr(model, "_original_do_torchao_reload"):
-        model._do_torchao_reload = model._original_do_torchao_reload
+    model._do_torchao_reload = model._original_do_torchao_reload
 
     for layer in model.modules():
         info = get_layerwise_info(layer)
-        if not info.can_load():
-            info.reset()
-            continue
 
         # Attention/MLA layers are processed after all other layers
         if isinstance(layer, (Attention, MLAAttention)):
@@ -198,29 +184,17 @@ def finalize_layerwise_processing(model: torch.nn.Module, model_config: ModelCon
                     "Layerwise reloading of Q/K/V scale weights is not implemented yet"
                 )
 
-            elif info.kernel_tensors is None:
-                raise NotImplementedError(
-                    "Layerwise loading of Q/K/V scale weights is not implemented yet"
-                )
-
             else:
                 _place_kernel_tensors(layer, info)
                 layer.process_weights_after_loading(model_config.dtype)
 
-        # No weights were loaded
-        elif info.load_numel <= 0:
-            # first load but received no weights. This happens on dummy load
-            if info.kernel_tensors is None:
-                materialize_layer(layer)
-
-            # reloading: place kernel tensors back as a fallback
-            else:
-                logger.warning("%s: Failed to load weights", layer.__class__.__name__)
-                _place_kernel_tensors(layer, info)
+        # No weights were loaded, place kernel tensors back
+        elif info.can_process() and info.load_numel <= 0:
+            _place_kernel_tensors(layer, info)
 
         # Process non-attention layers which did not load all elements. This can happen
         # if the created weight has extra padding elements which are not loaded
-        # Having too many of these delayed layers can lead to excess memory usage
+        # Having too many of these delayed layers can lead to execess memory usage
         # see Limitations(4)
         elif info.load_numel > 0 and info.load_numel < info.load_numel_total:  # type: ignore[operator]
             logger.debug("%s: Delayed processing", layer.__class__.__name__)
@@ -229,24 +203,20 @@ def finalize_layerwise_processing(model: torch.nn.Module, model_config: ModelCon
         info.reset()
 
 
-def finalize_layerwise_reload(*args, **kwargs):
-    finalize_layerwise_processing(*args, **kwargs)
-
-
 def _layerwise_process(layer: torch.nn.Module, info: LayerReloadingInfo):
     """
-    Finalize layer loading after all weights have been buffered.
+    Finalize layer loading after all weights have been cached.
 
     This function:
     1. Materializes the layer onto the target device
-    2. Loads all buffered weights
+    2. Loads all cached weights
     3. Runs quantization processing if applicable
     4. Copies processed values back to original tensor storage
     """
     # Materialize layer tensors onto device
     materialize_layer(layer)
 
-    # Reset online quantization flag so process_weights_after_loading
+    # Reset FP8 online quantization flag so process_weights_after_loading
     # will run again during reload
     if hasattr(layer, "_already_called_process_weights_after_loading"):
         delattr(layer, "_already_called_process_weights_after_loading")
@@ -255,7 +225,7 @@ def _layerwise_process(layer: torch.nn.Module, info: LayerReloadingInfo):
     for param in get_layer_tensors(layer).values():
         param.weight_loader = _get_original_loader(param)
 
-    # Load all buffered weights into materialized layer (using original loaders)
+    # Load all cached weights into materialized layer (using original loaders)
     for name, args in info.loaded_weights:
         param = getattr(layer, name)
         args.arguments["param"] = param
@@ -269,14 +239,13 @@ def _layerwise_process(layer: torch.nn.Module, info: LayerReloadingInfo):
 
     # Copy processed values into original tensor storage (preserves cudagraph refs)
     # this code is a no-op if not reloading (because kernel tensors is empty)
-    if info.kernel_tensors is not None:
-        parameters, buffers = info.kernel_tensors
-        for name, param in parameters.items():
-            param.data.copy_(getattr(layer, name))
-        for name, buffer in buffers.items():
-            buffer.data.copy_(getattr(layer, name))
+    parameters, buffers = info.kernel_tensors
+    for name, param in parameters.items():
+        param.data.copy_(getattr(layer, name))
+    for name, buffer in buffers.items():
+        buffer.data.copy_(getattr(layer, name))
 
-        _place_kernel_tensors(layer, info)
+    _place_kernel_tensors(layer, info)
 
     info.reset()
     logger.debug("%s: Processed", layer.__class__.__name__)
@@ -299,7 +268,6 @@ def _place_kernel_tensors(layer: torch.nn.Module, info: LayerReloadingInfo):
     for name in get_layer_tensors(layer):
         delattr(layer, name)
 
-    assert info.kernel_tensors is not None
     parameters, buffers = info.kernel_tensors
     for name, param in parameters.items():
         layer.register_parameter(name, param)
diff --git a/vllm/model_executor/model_loader/reload/meta.py b/vllm/model_executor/model_loader/reload/meta.py
index 138b9f01d69b..af20236d1c9d 100644
--- a/vllm/model_executor/model_loader/reload/meta.py
+++ b/vllm/model_executor/model_loader/reload/meta.py
@@ -104,7 +104,7 @@ def materialize_layer(layer: torch.nn.Module) -> None:
             setattr(layer, name, materialize_meta_tensor(tensor))
 
 
-class CopyCounter(TorchDispatchMode):
+class MetaCopyCounter(TorchDispatchMode):
     """
     Tracks total number of elements modified with `copy_`.
 
@@ -122,7 +122,7 @@ def __torch_dispatch__(self, func, types, args=(), kwargs=None):
         if kwargs is None:
             kwargs = {}
 
-        if func is torch.ops.aten.copy_.default:
+        if func is torch.ops.aten.copy_.default and args[0].device.type == "meta":
             assert args[0].numel() == args[1].numel()
             self.copied_numel += args[0].numel()
 
@@ -140,6 +140,7 @@ def get_numel_loaded(
     :return: number of elements loaded by the weight loader, the return value of the
         weight loader
     """
-    with CopyCounter() as counter:
+    assert args.arguments["param"].device.type == "meta"
+    with MetaCopyCounter() as counter:
         return_value = weight_loader(*args.args, **args.kwargs)
     return counter.copied_numel, return_value
diff --git a/vllm/model_executor/model_loader/reload/types.py b/vllm/model_executor/model_loader/reload/types.py
index b1506fadcc71..a7edbe79a75e 100644
--- a/vllm/model_executor/model_loader/reload/types.py
+++ b/vllm/model_executor/model_loader/reload/types.py
@@ -16,8 +16,8 @@ class LayerReloadingInfo:
     # model format (meta), populated by `record_metadata_for_reloading`
     restore_metadata: LayerTensors = field(default_factory=lambda: ({}, {}))
 
-    # kernel format (device), used to copy into when reloading only
-    kernel_tensors: LayerTensors | None = None
+    # kernel format (device)
+    kernel_tensors: LayerTensors = field(default_factory=lambda: ({}, {}))
 
     # track how many restored elements are ready for loading
     load_numel: int = 0
@@ -29,5 +29,5 @@ class LayerReloadingInfo:
     def reset(self):
         self.__init__(restore_metadata=self.restore_metadata)  # type: ignore[misc]
 
-    def can_load(self) -> bool:
+    def can_process(self) -> bool:
         return self.load_numel_total is not None
diff --git a/vllm/model_executor/model_loader/weight_utils.py b/vllm/model_executor/model_loader/weight_utils.py
index 37023d3f1f5c..fbaaef59de0b 100644
--- a/vllm/model_executor/model_loader/weight_utils.py
+++ b/vllm/model_executor/model_loader/weight_utils.py
@@ -1323,11 +1323,25 @@ def initialize_dummy_weights(
     is fixed, the random values generated by this function only depends on
     the parameter's number of elements and its data type.
     """
+
+    # Check if any module uses online quantization with meta device weights.
+    # If so, we'll skip initializing params on meta device since they'll be
+    # handled in `process_weights_after_loading`.
+    def uses_meta_device(module: torch.nn.Module) -> bool:
+        quant_method = getattr(module, "quant_method", None)
+        return getattr(quant_method, "uses_meta_device", False)
+
+    has_online_quant = any(uses_meta_device(m) for m in model.modules())
+
     for param in model.state_dict().values():
+        if has_online_quant and param.device == torch.device("meta"):
+            # For online quantization, weights are created on meta device and
+            # dummy weight init will happen in `process_weights_after_loading`.
+            continue
+
         initialize_single_dummy_weight(param, low, high, seed)
 
 
-@torch.no_grad()
 def initialize_single_dummy_weight(
     param: torch.Tensor,
     low: float = -1e-3,