How is that different to one person (ie. the one allowed to spend) setting up a wallet... and giving out the xpub (for an HD wallet) or the bitcoin address (ie. for a single private key paper wallet) to the other users (to create watching-only wallets)? Or is your idea to streamline the process?
Yep, it does uses the xpub.
As for the spending controls... how do you enforce this? What is stopping the person with "spend" permission exporting the private key(s), importing to another wallet and spending whatever they like?
![Huh](https://bitcointalk.org/Smileys/default/huh.gif)
Essentially, you encrypt it.
If your wallet doesn't provide access to the private key(s)... what backup facility do you provide to ensure that the funds can be "recovered" in the case of an issue (hardware failure etc)?
Seed which is broken down and given to each member of the Treasury.