It can work, but it may need someone to setup a framework first that people can add their projects to.
A whole legal, quality control, manufacturing and profit model framework. It is hard for individuals to come up with that by themselves.
Secondly, there has to be a project leader who can get as much help as he wants from volunteers, but one person has to make the final decisions.
There may be community framework standards that each project has to meet - like common interfaces, standard physical sizes when things have to interoperate, standard power sources. If the design uses firmware, you want the design to be able to update the firmware via USB rather then. You want reprogrammable parts used instead of one-time programmable parts. You want a standardized low level bootloader so there is a way to recover when the firmware upgrade has crashed and the device is dead.
Rather then trying to stop Asian manufacturers from stealing the design, you probably want to encourage them to build fully spec'ed products from the design, and you may be able to get the same manufacturers to assemble kits. You might even get the manufacturers to suggest changes that would make the build better. If they make a better case, encourage them to make the case available as a separate part. The community gains by getting the items at a great price.
The profit center, if there is one, will probably be in terms of publishing books and manuals on the designs that are more digestible then the plain opensource documents, and providing professional services like repair, calibration and customization of the designs. Also licensing. Many large organizations have a problem with Opensource because they actually want to pay for a license, so all their assets are licensed. When you pay for a license, the license owner is leagally responsible. When you don't pay for an opensource license, you as the end user are legally responsible for things like copyright violations.
Richard