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Sure there could be plenty of problems, but that doesn't mean it couldn't work. If your lead singer is willing to hang back and keep the "guest" singers going, it could be fun.

My advice would be to think about additional ways to make the event profitable:

Don't be shy about asking local businesses to donate.
Food and beverage places can donate refreshments.
Any business could donate products or services for a silent auction. The items or services don't have to be big or high-priced, and very small items ca be grouped together to increase interest.

My wife goes to and/or coordinates lots of charity events, and the financial success always comes from corporate sponsorships, and the silent auctions.

Good Luck!
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