The reason this would not work out very well is the players in the cage would just rage quit all the time as soon as they get stuck watching everyone.
It would get boring being stuck in the cage.
Maybe have it set up so if a every time someone new dies they take the place of the player in the cage.
The guy waiting in the cage could then come back in and the new person would have to wait for another team mate to die to re-spawn.
That would work out better and not be as boring.
I would not mind trying that game mode out.