In theory I think it is a cute idea and the kids would have a blast....however, realistically I think you have the very serious potential for kids to get physically hurt.

Beyond the the kids who are going to want to throw things hard in someones face I would also be concerned with kids slipping and falling on the food on the vinyl matting.

Just came up with an "unconventional" fundraising idea but I think the kids would go for it in a big way. What about raising $$ for a food fight. Haven't thought much past that. We could make up big t-shirts that the kids could wear that would say "I survived Food Fling 2005". Kind of like raising money to throw a pie in the face of the principal but this way the kids would be their own targets. We could ask people to donate canned foods, etc. Would this fly?
We would need yards and yards of visqueen . . .