IMHO such a project *could* work with the wiki system, especially for OCRed pages that need manual work. This could be done by a community rather than by a single person, especially if, e.g., a book is broken into chapters taht can be edited seperately.
It's already been done without a wiki see,
Cool! Seems all they need is a better interface to present their proofread books;)
To Jimbo: How about setting up a [[wikipedia:Support wikipedia]] page, with a PayPal link like the above site has? That's no advertisement, and the money (if any;) could go to a special account for the Nupedia foundation (coming up, right?).