This assumes the existing radio links can handle the extra bandwidth. I don't see a WiFi card, so they may use radios with low-baud serial connections. Maybe the radios are good enough that doubling the radio communications is fine. Now, all the new hardware means extra draw (and potentially extra batteries) on each quadrotor. They might fly with this extra weight, but it won't be nearly as long.
Also, indoor flying means no GPS. In this case, using accelerometers means something is dead-reckoning the position of each quadrotor. There's no more space/power for processing juice, so the external system must do this. Now the external system must take this localized data from each quadrotor and place it in some global coordinate system (how does it do that?). It will use dead-reckoning to determine the position of each quadrotor. This means the system is accumulating errors over time, for each quadrotor. At least sailors could eventually correct their position with stars - there is no real global correction with these sensors. They could hypothetically do radio range estimation on the radio signals of the quadrotors, but who knows what kind of accuracy they will get.
Now I remember why I left robotics :-)
Correct. However, indoor positioning tech will likely come of age in the next 12-18 months driven by indoor mapping and navigation. Once that becomes commoditized, it'll make positioning a little aircraft like this in the x,y plane of a floorplan doable without dead-reckoning. From there, you could probably do some crude lidar to measure the distances above/below the craft to the ceiling/floor.
The data from individual sensors would be very noisy.
I run the 100 Hz flight control loop for my tricopter on an ATmega1280 clocked at 16 MHz. A _lot_ more could be done with something like the Beagleboard, including generating a 3D map of the surroundings if I mounted a Kinect on it.
I want to agree about the decentralized operation because there would be so many wireless signals that could interfere, but those guys seem to be controlling 20 quadrotors without problems. I know XBees can be configured to communicate on different channels, but decentralized operation will most likely require something beefier like wifi (and that, I don't know how to configure to work over so many different channels).
What do you think?