Arduino as field programmer

I'm interested in developing a shield that that can house a Nano(programmer), be plugged onto a full sized Arduino(target), and field flash sketches to the target Arduino. It would also be interesting to provide the capability of reinstalling a bootloader to the target Arduino, though this would be a secondary goal.

Are there any known projects or sketches doing similar utility?

Is this project something that would be useful to others?

Sure, take a look here

It doesn't really need to be a shield - you just need a 6-pin ICSP cable and a capacitor connected to disable reset on the Nano. Connecting an ICSP cable is much easier and quicker than installing a shield. You may even be able to program an Arduino with other shields installed, as long as none of them interfere with the SPI pins.