This has certainly been done before; in fact it was seeing the fantastic results in a blog I enjoy recently that inspired me to have a go at it myself (and of course I can't re-find it again now... note to self, take better notes of your inspirations!)
The only thing that is difficult about making this cake is the patience it takes to bake every layer; especially if, like me, you only have two cake-pans with which to proceed on.
The recipe itself is just a simple butter cake, you can use your favourite one if you have it. A simple search online brings up quite a selection if you don't! The magic comes from the colours of each layer which of course comes from food colouring.
Eventually you have all the layers ready to go! I had to slice the tops off most of the layers to make them sit flat on each other..
And then you start icing.. and whipping up more icing.. and icing between each layer.. and whipping up more icing.. and then even MORE icing. I even had to make a mad last-minute dash out to the store when I realized I had nowhere near enough icing sugar then I had anticipated.
I'm sure you could make your cake a bit more exciting on the outside; but I wanted mine to be a surprise. And I have to say, my plan couldn't have gone any better. My eldest Niece has quite the observant eye to her; and she quickly not only noticed my cake, but told me quite bluntly how boring it was. (I have gotten quite the reputation for family dinners to come up with interesting and exciting desserts)
I told her I knew that it was a bit plain, but I had ran out of time and only had enough ingredients for a basic cake. I appologized to her and promised to make a more colourful one next time.
She made me promise and then said she supposed she could live with a plain cake after all...
Dinner passed and it came time for dessert. I asked said eldest niece if she would like to cut the cake and help me serve it which she quickly accepted (she loves to be a helper)
She cut in and very carefully pulled out the first slice and went "WHOA!! THAT IS SO COOL!"
Both my nieces spent the rest of the evening babbling on about how awesome and yummy they thought my cake was.
And you know what? It WAS awesome.
Worth every second of assembly time.