[mikeash]

Technologically I don't see why that couldn't be done. Transmit known coordinates, do a rough estimate of your distance using signal strength, and add that to the position error. If you get lat/lon from another device and it looks like that device is 300ft away, then your position is lat/lon ± 300ft.

It could be tricky to do securely. How do you prevent a malicious device from spoofing bad location data?

Android and iOS do something sort of like this already, determining position by looking WiFi base stations with known locations and attempting to do some triangulation. This can speed up a fix if the GPS signal is having trouble, and can be essential for indoor location because GPS signals don't penetrate structures well at all. My understanding is that the database gets built up by the devices. When they have a good location fix, they'll report back on the WiFi base stations they see, so that the mothership can build a database of where the things are. This is a little bit like what you describe, but with a really roundabout data path.