You'd be able to find 3 relevant peer reviewers for each article, get their comments, feed them back to the author, then make sure the article was appropriately amended prior to publication (or rejected if required) for £1 per article? Your time must be very cheap! Or am I missing something?

Exactly. I fully support the open research movement as it will drive competition, new business models and spread quality research, but the review process is probably a very challenging one to manage.

People will evenutally solve this problem parts at a time, but I wouldn't put a £1 per article price tag on it yet.

I think that's what PLoS does. Their costs are here: http://www.plos.org/publish/pricing-policy/publication-fees/

Their costs aren't low, and presumably they don't make profit either. It's fair though, although i might say a bit expensive for authors from developing countries. You want to have a barrier in publishing and a good review process, and it's more fair (esp. to students in the developing world) to charge the authors rather than the readers.

Hopefully, if we have competition among open-access journals even the costs may go down.

I cannot find 2011 data, but over 2010 their net surplus was $2.8M, $2M from donations and $0.8M from operations (http://www.plos.org/media/downloads/2011/Form990_2010.pdf)

I use 'surplus', not 'profit' because PLoS is a non-profit. They can build up reserves to guarantee continued existence in times of hardness, or for future growth (for example, they may need money in the bank to rent or buy offices, or to make them more attractive to prospective employees (who is going to work for a non-profit that, every month, hopes to be able to pay your salary?)