The 500-series format has one input and one output per channel, to the best of my (admittedly limited) knowledge. Assuming you use those as your line in and out, what do you use for the digital I/O? Front connectors? That's going to make a rack pretty sloppy.
Also, how are you going to connect all of your single-channel converters to your other digital equipment? I can't imagine there are that many pieces of equipment out there with a dozen or so S/PDIF connectors onboard.
It's not necessarily a bad idea, if you can identify a need for such a product, but these are just a couple of things that would make me question it as an idea that would find a valid niche in the market.
It just seems like it wouldn't be nearly as useful as a multi-channel AD/DA device that sits nicely in a rack, has plenty of analog and digital I/O connectors and channels, and can be patched in wherever you need it.
edit: Now, having conversion built into a console is being done already. But that's a little different than a 500-series converter.