Yes. If the publisher still holds e-rights and hasn't exercised them, a flat fee would be best. The next step would be authors, their agents, or whoever is the executor of the literary estate. Those should be done as royalty payments.
Whether or not an advance is involved would probably depend on the demand for particular titles. If the book is out-of-print and lying fallow, any productivity is better than none. Most authors, for all the promotional reasons we've mentioned before, would be happy to get their OOP books back out and available. It would make sense to spend some advance money for some bigger-named, high-draw authors, but I think the upfront acquisition costs for most of the list would be relatively low.
As to the infrastructure. I don't think out-of-the-box Drupal would do it, but it could certainly be tweaked. At
P&W, we're currently in the middle of a really large Drupal-based project. There is a lot of media type tuning involved and a lot of integration with custom apps. The upside is that Drupal is
incredibly customizable. You can plug in anything you need and still end up with a clean, manageable system. (Goodbye, Dreamweaver!)