This idea is something I've thought about for a while. Mainly because seeedstudio's $10 PCBs are 1.9" square and the arduino shield needs to be 2.1" to span both rows of headers.
Don't quote me, but I'm pretty sure I've seen shields done on the 5 cm square boards. The header pin holes are awfully close to the edges, but they appear to fit.
If you have any links, I'd love to see how it came out.
maybe have drill holes that are broken open by the edge of the board as guides.