I think this is a really interesting idea. I had two thoughts:
What about a kind of database? If a GM says, I need a thieves' guild, they can look at the fully written up, open content thieves' guilds and pick one that suits their purposes. I know this doesn't fully fit what you're talking about, but I think one way to increase usefulness is to contribute components rather than overarching, unifying setting themes. Also, I think this might cut down on the NPC plots and mary-sue PCs you mentioned.
Random thought about geography. Your whole idea for some reason makes me think of a storybook, where you turn the page and a new city pops out. So I was picturing that, and wondered, what about a world like an origami creation--where you travel almost through folding space, or paper. That way, geography hardly matters. Every time someone creates a new city/region/etc., you just put another fold in the paper.
Okay, actually I have a third thought. One thing I think would be so helpful in adventure modules would be a sidebar at the beginning saying, "Looking to insert this in your own world? This module essentially requires 1) an isolated swampy area for a hidden temple and 2) a forgotten serpent god." Like, a list of the essential setting pieces. I don't know if that makes sense, or would be helpful to anyone else, but it seems useful to me.
Anyway, count me interested. I'll be paying attention to your thread.