I don't see how it could work at all. The reason for this is simple. First, there are lots of places online where you can get code for free.
One word: support.
You’re not paying for the code, you’re paying for the support. For one of my templates, I had to hack a “free” lightbox script for 2 hours and it still didn’t do what I wanted. I would’ve gladly paid 12$, asked my question to the author, and got my two hours back.
You know as well as I do that jquery plugin authors don’t have the time to answer all the 250 comments about the code they released for free.
And for those saying that people already offer their code for free, well maybe it’s because they have no way of selling it. Before Themeforest, I never sold a single template, or even thought about doing it. I really believe that CodeCave could be a new way of getting paid for all the great coders out there.