As a journalist and potential spectator, I think it would be great theater. But if I were thinking through strategy for the Obama campaign, I'd have serious concerns. Here's what today's Times has to say about the idea:
In a sign of what could be an extremely unusual fall campaign, the two sides said Saturday that they would be open to holding joint forums or unmoderated debates across the country in front of voters through the summer. Mr. Obama, campaigning in Oregon, said that the proposal, floated by Mr. McCain’s advisers, was “a great idea.” ...
The rivals are openly discussing staging forums across the country to speak directly to voters, an idea that is by any measure unconventional for a general election campaign.
Asked about the idea on Saturday, Mr. Obama told reporters in Oregon, “If I have the opportunity to debate substantive issues before the voters with John McCain, that’s something that I’m going to welcome.”
McCain has several big disadvantages vis-a-vis Obama. He faces a massive enthusiasm gap and will have trouble attracting large crowds. He's in all likelihood going to be massively outraised and outspent, making it hard to get his message out. And, possibly as a result of the previous problem, he'll be cast as a right-winger determined to continue George Bush's policies.
The unmoderated debates would help him overcome all three problems. They'll draw big crowds and generate lots of buzz. They'll help him get his message out for free. And, just by virtue of appearing frequently at Obama's side and having a civil debate, they'll make him look much more moderate than the Obama campaign wants him to look.
I don't see the upside for Obama.
Update: Alex Massie has some good thoughts about why the McCain proposal was so shrewd.