Victor Lombardi about a retailer he worked with that implemented "distributed classification":

"[T]hey have many thousands of products that need classifying on a regular basis. The products are relatively inexpensive commodities that change often and are sold through stores, a print catalog, and online. All the information about the products, including classification, is managed in one big content management system. [...]
Instead of looking around their own organization for someone to classify (someone who has no interest in getting it done right, other than being paid to do so), they moved classification outside the organization to those who already have a self-interest in getting it done, the manufacturers whose main focus is selling more products. This is a more scalable solution than hiring a team of librarians. The rules of the system keep the manufacturers from abusing it."

You can’t just throw your taxonomy to outsiders and expect it to work as is or else you’ll likely have a GIGO (garbage in garbage out) problem. But if you provide them some kind of training or guidelines, and make sure their input is clean and relevant, then yes this is a good way to go. At our site about fantasy and science fiction books we collect a lot of information provided by readers and writers, and this lets us improve our database faster than doing it all by ourselves.
One of my goals is to use the site itself (rather than email) to collect that kind of metadata more systematically and to cut the number of steps between third-party input and exposure on the site (I don’t plan to go 100% towards a wiki model, so there’s always going to be a validation step in the middle of the workflow rather than after the fact). But most of the data we get from the outside world is of high quality once we’ve established with these contributors what it is we’re looking for (which the public site goes a long way to make explicit already). And the self-interest logic is fully at work for us too, which goes without saying for writers (the additional data will contribute to promoting their works better) but also for readers who simply want to enjoy a better resource about their favorite genre.
01/07/05 update: Louis Rosenberg: Folksonomies? How about Metadata Ecologies?, Clay Shirky’s counter-point.