Personally an ETF full of altcoins seems insane to me, but it would certainly be fun to try, and a stock market is one of the cooler things you can emulate with PeerAssets so this makes a great live trial.
It shouldn't contain more than 6 coins/assets at once. If a dollar-peg can be created with PeerAssets, that would be useful to include in the basket, as a volatility-suppressor.
I imagine there will be an implicit indX/BTC pair? Dunno what else you'd do the IPO on.
I'm eager to see how this plays out, but I wouldn't want to invest without a more detailed plan. It could be worth parking a little bitcoin in.