I thought I'd share the following video with you. After spending several months trying to replicate the rock solid loiter videos, I've finally suceeded - and the only thing that I needed to do (other than vibration dampening) was to raise the GPS several inches above the top plate and keep the wires away from interference sources. The HDOP has dropped from 1.9-5 to 1.3-1.6.
Additionally, I've add LED strips to the arms which are controlled by the ArduCopter board using some custom code. When armed it oscillates around like shown. When disarmed, the arms flash when a GPS lock is absent, and are solid when there is a GPS lock. Giving a clear indication when its safe to fly.
You can find the code for my leds.pde file at:
It's fairly easy to modify, the update_copter_leds() function gets called at regular intervals, you just have to decide what to do - in my case I check the armed status and GPS state.