Your PSU may have died due to not loading the 5V/3.3V rails...if you read the specs on most PSU's they require a minimum current otherwise the power is dissipated internally in the PSU. Over time (could be hours or weeks) it causes the PSU components to fail. Some people suggest powering the HDD from the secondary PSU in order to load the rail which I think is a good idea (prevents having to wire power resistors to the rail).
I would see no problem in doing what you suggest, although, I would recommend a few things. First, make sure to have a common ground between the rigs (as short as possible to prevent ground loops). Second, use a molex powered riser on the GPU's that are not on the same PSU as the Mobo and power them from the same PSU as the 6pin connected to them (this is how I am running my rig that has a secondary PSU).
The best way is always to use one big PSU but I believe there is very little difference between using a multi-rail PSU or 2 properly connected PSU's.