This is how my college worked, and I think it's a fabulous idea that promotes personal responsibility rather than CYA bullshit. During orientation, all the incoming freshmen (~200) were herded into a lecture hall, and a panel of five upperclassmen pontificated on the significance and nuances of the phrase "don't be a jackass." And that was basically it. We could drink as much alcohol as we wanted, we were just expected not to get into fights, break other people's stuff, get sent to the hospital, or otherwise do things that we or someone else would regret. We could burn quite a wide variety of things, in bulk, so long as no one got hurt. We were given unrestricted 24-hour access to computer labs, chemistry equipment, etc. Most of my exams were take-home, and we were expected to adhere to the rules (time limit, closed-book) because that was the cost of the privilege. We could pull all sorts of pranks against others students and even faculty, so long as we left contact information and any effects were reversible within 24 hours. We were expected to be responsible adults, and were treated like responsible adults, so we acted like responsible adults (well, we acted responsibly anyways). We actually had less alcohol-related incidents (assaults, property damage, alcohol poisoning) than any nearby college, despite (read: because of) their having significantly more restrictive policies.
Like Nordstrom's, we did have to make a few concessions to the outside world, though they were few and far between. For example, we were not allowed to have bonfires that were taller than the dorms, because then women's college across the street thinks the school is on fire. The administration is totally fine with 50 mildly inebriated college students milling around an open flame in the middle of a dorm courtyard with no "adult" supervision, but they still don't like explaining it to the local fire department.