Is ArduCopter functional without GPS?

I am looking into using this system for a school senior design project, however our project limits us from using GPS. Instead we are using RSSI values to determine distance between copters, we may have one command copter with GPS for a point of reference. I need to know if the system will work without a GPS module because I’ve been unable to find a single example of an ArduCopter project that didn’t use GPS.

yes, it works without GPS, obviously no navigation then.
if your objective is to avoid GPS, you could easily go for GLONASS.
You will find out that “RSSI” is not precise, at all.

You might want to present your project at DIY Drones and/or join the developer mailing list. A few people are working on alternative methods to determine position but to my knowledge nobody yet via some RSSI value.

Yes, it does work without GPS, and in fact, we recommend you disconnect GPS whenever you are flying indoors.

Flight performance without GPS will in fact be minorly degraded, even in non-GPS modes. This is because the GPS is used to make corrections to the AHRS. You would only notice this difference during high speed, highly dynamic flight. Not something you’re likely to do indoors. I include this point only in the sake of providing the complete answer.