Do it! My husband actually did exactly the same thing in San Francisco, and with pretty much almost no advertising (we submitted the even to SF.funcheap.com) we got about 100 people throughout the day that checked us out. That could also be because the venue was an art gallery that's in the back of a comic book store.
http://www.indieape.com/indie-artcade-event/I would say video games are popular no matter where you live. If you do enough advertising and marketing, people will come.
If it helps, I'll go through our process:
Venue: We were lucky in this aspect. My husband had been a loyal customer to a comic book store for awhile and they happened to also have an art gallery space in the back. So once he decided he was gonna do this Indie-artcade thing, he asked about how much the space would be for a day, but it was given to us for free! That helped a lot with the cost. I imagine for you, it doesn't have to be in an art gallery space. Ask your local coffee shops, maybe even comic book stores (if they have space), or wherever you think the owner would be willing to work with you on it.
The Games: For us, we contacted the devs of the games we wanted to be available to play. So we got permission from the people from Shovel Knight, Nidhogg, and Luftrausers. It was only three because the gallery space was small. Plus, we built tables and cabinets ourselves. I'm not sure if you plan on just inviting devs to come and showcase, or if you want to host them yourself. If you want the devs to come themselves, I would suggest finding your local game dev meetup. Go talk to the people there and see if they're interested. The other option is host the games yourself. You would have to get your own computers and whatnot though. You can ask to borrow friends, or rent them.
The Art:My husband himself is a graphic designer, so he did several pieces himself. But for others, he explored places like deviantart, or already was familiar with other artists that he liked. We also asked fellow art friends if they'd like to contribute. Basically he contacted the artists and explained what the event was about and if they'd like to contribute any of their art pieces. Most of them were happy to do so, as it's good exposure for them. We only asked that they mail their prints, but after we had to buy frames for all of them, we wished we would have asked them to supply a frame as well if they could.
Advertising: Of course, social networking is going to be your best bet here. Does your town have a website that lists upcoming events? Get listed! Or maybe there's a facebook group dedicated to cool things happening in your town. Hang up flyers, get on twitter, have the game devs tweet out your event for you. With enough advertising in advance, you could probably get a good sized turnout. You can even make a website with a newsletter subscription so you can email people when it's closer to the event date.
All in all, I encourage you to try and put this together. We took a survey at the event, asking people if they have heard of these games or not, if they're familiar with indie games in general, and if the event made them more interested. It was all positive. Only a small handful of people were already familiar. So I think it's a fantastic way to help spread the word and culture of indie games!!