Harvey Mudd's taken that approach for a few courses, having student projects develop fairly course-specific management/grading/feedback tools. They're less general, but tend to be less crufty and a good fit for the course as a result. The tools for the intro C++ & data-structures course, for example, integrated with revision control, a submission system, gcc compiler, tests, and various lint-type tools, and an automated early-submission system that would give students basic feedback on whether their submission was compiling and passing sanity checks. Also, there was a grading interface for entering comments (with some things pre-selected, like failed tests, and easy cross-reference to the source code), which would then record the results, and produce & email nicely formatted results emails when done.

It was an amazingly bad awakening when, after that was my first-ever TA experience, I TA'd a course in grad school using Normal Course Management Tools, which by comparison didn't really automate much of my job at all, nor particularly seemed designed to fit with what the course was doing.