It works. Arduino, Makerbot, DIYDrones and a couple of others had 1M+ yearly revenues in 2010, they probably have all grown since then. Open source hardware is probably easier to commercialize than software, because it still has to be manufactured by someone.
I'd be concerned about drafting up blueprints and having them copied by Chinese manufacturers.
Though what I'd do is make my first system just standard libre rights on everything, and that should build a platform for me to kickstart / donation fund future design efforts, and when those are done just release those as free as the last without a care if someone dupes the hardware because we already funded the design.
Why? Are American manufacturers any more trustworthy? Most electronics products heavily rely on the Chinese supply chain anyway, regardless of where their final assembly takes place.
My feelings are more about autonomy and choice for its own sake than trust. In this context though, I'd just want to be sure I'm supporting the efforts of people who are responsible for developing products I actually want.
I think you're on the right track, because your hardware is going to be ripped off no matter what. It happens to big companies that obfuscate their designs and it happens to open hardware projects too. At least by freely releasing your designs, a legitimate user can manufacture their own parts instead of just the black-market manufacturers.
Come to think of how Red Hat is doing great even though they are an open source company. Why can't this work for hardware as well?