Hi, is it possible to make two Arduino BT "sense" proximity from each other and for instance if they both have a led attached make it grow brigther with proximity?
Thank you for your time.
Marv
Please, just a simple yes or no reply would be apreciated 
If you mean detecting how close they are to each other then I don't think so.
However you can get them to talk to each other when they're in range of one another as they just send serial data (I believe).
If you wanted proximity detection you could plug them up with this kind of device http://arduino.cc/en/Tutorial/Ping?from=Tutorial.UltrasoundSensor.
Hope that helps in some way!
Tim 
The Arduino BT models are more expensive that the other boards. Therefore, not too many people have two of them sitting around to play with.
In general, though, BT either is able to make a connection, or it is not. The difference in signal strength may be measurable on each BT. Whether that measurement can be obtained by the Arduino, or not, I do not know.
However, the changes in signal strength are non-linear, and very, very small.
Using the signal strength, if it's even available, as a proximity gauge is going to be difficult.
I'd say that if you didn't already know this, you wouldn't be able to do it.
Hi, thank you both for the replies.
@kabatwa
That link is interesting although that would detect anything physical and not another Arduino Bt exclusively.
@PaulS
Yes, what you described is exactly what crossed my mind, if I can pull it off or not, I can tell you Im not too sure 
but Ill sure give it a try.
Also you noted that the BT might not be accessible by the board itself as a mean of supplying data?
I was trying to figure out if I could arrange 3 boards and upon detection of each other they would compare something (a string, a secret code etc) and if it matched they would start to communicate but they would be susceptible to the "ping" from another Arduino.
Can blue tooth handle more than one single paired connection and can Arduino make use of the blue tooth?
Also this is not exclusive to Arduino, if anyone can recommend any other way to achieve this, or places to learn please do so.
Thank you for your answers.
Also you noted that the BT might not be accessible by the board itself as a mean of supplying data?
No. I said there may be data that the BT module knows, such as signal strength, etc. that it does not make available to the Arduino. I don't know, as I have not yet had a need for a BT module on an Arduino.
Hi,
the WT-11 chip of the Arduino-BT has a rich API called iWrap. It supports the command RSSI which tells you the signal strength. Here an example, the lowercase strings are the commands, the uppercase the response:
inquiry 3 name
INQUIRY_PARTIAL 00:03:7a:0b:c8:74 120104 "" -63
INQUIRY 1
INQUIRY 00:03:7a:0b:c8:74 120104
NAME 00:03:7a:0b:c8:74 "TOSH"
list
LIST 2
LIST 0 CONNECTED RFCOMM 666 0 0 173 8d 8d 00:03:7a:0b:c8:74 1 INCOMING ACTIVE SLAVE ENCRYPTED 0
LIST 1 CONNECTED RFCOMM 666 0 0 165 8d 8d 00:03:7a:0b:c8:74 2 INCOMING ACTIVE SLAVE ENCRYPTED 6
rssi 0
RSSI 00:03:7a:0b:c8:74 -60
rssi 1
RSSI 00:03:7a:0b:c8:74 -58
rssi 0
RSSI 00:03:7a:0b:c8:74 -67
rssi 0
RSSI 00:03:7a:0b:c8:74 -73
rssi 0
RSSI 00:03:7a:0b:c8:74 -74
rssi 0
RSSI 00:03:7a:0b:c8:74 -59
The signal the value -74 was a distance of 1.5m, -60 are around 0.5m, so its pretty sensitive.
You can download the iWrap API from the sparkfun website: http://www.sparkfun.com/datasheets/Wireless/Bluetooth/iWRAP_2.2.0_User_Guide.pdf
MikeT
@Mike T
Thank you that is very useful! Does anyone knows if bluetooth can handle several connections at the same time?
Also any good references in dead tree form?
Hi Marvy,
Does anyone knows if bluetooth can handle several connections at the same time?
Sure! The WT-11 supports the MUX mode. For an example sketch, look here:
http://www.arduino.cc/cgi-bin/yabb2/YaBB.pl?num=1252420773#6
Before you start you should know that the "SET CONTROL MUX 1" command starts the MUX mode and this setting is stored permanently in the flash. This means without precautions, you will end up in the MUX mode and not be able to upload a new sketch, even after a power cycle of the WT-11. Therefore the sketch includes the "SET CONTROL INIT SET CONTROL MUX 0" command to switch back to standard mode after powering on.
MikeT
Thank you for the tip.
I was not aware that the ArduinoBT boards were running for 95?, while it is not that expensive for what you get it doesnt allows me go beyond 2 or 3 boards.
I was planning on getting my hands on a few more.
Im looking into the Xbee module, can it handle more than one connection at a time?
There are Series 1 xbees. These are basically point-to-point. That is, one radio talks to one other radio, which can talk back to it.
There are series 2 xbees. These are mesh radios. Any number of radios can talk to one central radio. Theoretically, two way communication is possible, but I never could get it to work.
Xbee radios can detect signal strength, and can communicate that value to the Arduino it is attached to.