I think there is demand, but I think the economics of the toy business are really tough.
http://www.dcurbanmom.com/jforum/posts/list/33573.page
That said, there are stores around so it's not impossible.
You might want to take a look at what's out there now. I think the question is whether you can pay the bills with a toy store that sells ONLY these small batch items, or whether you will be forced to stock a lot of conventional inventory. A lot of people go to toy stores to complete a task (ie find a present) but they need enough selection to be sure they will leave with what they want. Some people are willing to browse the way you might browse for clothes. But are there enough to do that, or will you be forced to become a Kinderhaus or Tree Top Kids?