I used to go untill one day I started seeing kids in school uniform turn up, and the in house dealers happily selling them weed. I knew it wasn't going to last long, and sure enough it was raided a few weeks later. At its hight there was some serious business happening there - 1000s of $ trading hands every week, most of it being of very low quality.
It's a good idea though, when it was properly run it was heaps of fun. There used to be protests and such, and a bus from nimbin used to show up sometimes. The stuff about police not being allowed on uni property is bullshit, however someone in the administration used to get a courtesy call from the police and would warn if a raid was likely. They also used to have peope with whistles on the lookout for approaching detectives. I was there once when the cops decided to pay us a visit - they were in plain clothes with badges around their necks. We all bolted away laughing but they got a couple of people...
I think the only way it would work would be to keep it for the students and members only, maybe move it around with stricter rules for who can attend.