Wonderful idea. I agree with Diane B. that it's best not to schedule the event too much; decide what time someone who was close to the relative will get up at the mic and say, "If anyone would like to come up now and share a story about 'Bill,' please feel free to do that; we'd love to hear from anyone." Dont' leave it totally open-ended, though-- have in your heads a particular time by which someone gets up and says, "One more last story and then we'll eat," so that the mic time doesn't go on and on. Have some of your relative's favorite foods to eat and do mention that fact to the guests, by the way....
Some folks will not be comfortable getting up at a mic but will prefer mingling and talking in small groups. You could also, before the event, let it be known that anyone who wants to write out a brief remembrance or condolence or anecdote and e-mail it to you, or bring it on paper on the day, should do so. Put those into some kind of simple scrapbook and have it out on a table, or do that afterward for the immediate family.
My mom did not want any kind of funeral or memorial service and left no directions for anything at all, but we knew her friends would want to mark her life and her passing. So we did a simple open house at her home, had a caterer bring a small, simple buffet, and just greeted folks and went around talking with everyone. It was very, very low-key and nice. We didn't even do the open mic thing but several folks brought short, written remembrances to give to us, which was very, very special to my brother and me---hence my idea that you might ask that anyone who wants to do that feel free to do so.
One other thing: If your relative supported any particular cause or was involved in any particular group, activity, church, civic organizatin, whatever, consider providing a way for people to make donations in his name to that cause or organization. Many people feel they want to "do something" when someone dies, and sending flowers in a case like yours (and ours) doesn't really work well. Many folks do like the idea of contributing to a charity in the name of someone else, if they know that the person really did support that cause. We sent a printed invitation to our open house event, and on it we mentioned "If you would like to make a contribution in X's name to a cause she cared about, please consider these charities" and listed one health-related charity and one historic preservation group. I also have seen this done by other families -- for things like the local animal shelter for an animal lover, for instance. Just a thought, to give folks something concrete to do when sending flowers or bringing food just doesn't really fit the occasion.