Everyone submits ideas, some voting and discussion takes place, then people work on what they want to work on.
Splitting equity and revenue is a much more complicated issue. In my experience it's easy to figure this out for small teams, provided the members are reasonable and can appreciate each other's work.
There was a software startup that was trying to do exactly this but I can't remember what it's called. Quirky is also doing this, albeit for tangible products, and they have an interesting approach.
The logistics problems aren't the big difficulty to me. To me the activation energy, so to speak, is where it gets tough. Who starts the thing? How does it get rolling and profitable such that you could get people to do such a thing.