Is quadcopter design scalable?
Ducted fan designs like quadcopters are actually somewhat simpler in some ways to design and build than single-rotor helicopters, because the nature of the design means that the rotors don't need the complex mechanical linkages of a helicopter's main rotor; the four rotors can control pitch and bank simply by varying RPM, and so each one can be a fixed-pitch propeller. The design becomes more stable with a variable-pitch rotor design as the possibility of varying thrust with a constant rotor speed reduces unwanted roll moments from gyroscopic forces, but that throws the simplicity argument out the window (and helicopters have potential roll problems during throttle-up as well, some of which had to be solved before the thing could even take off).

Yaw is a little trickier, and one potential limiting factor to scaling up the design. The problem is that with all four rotors in a fixed vertical orientation, which is the simplest mechanically, there's nothing to produce lateral thrust to turn the aircraft around the Z-axis (straight up from the ground through the 'copter in level flight). Options include:


One laterally mounted fan. Simple to design, but you're adding one more fan to a design with a lot of high-speed spinning parts already, and the fan would either have to stop and start in opposite directions very often (easy with a little DC motor and plastic fan on a model, much more difficult when scaled up), or the blade pitch would have to be variable, to allow variable thrust to either side while the rotor turns in one direction) which increases complexity again.
Two lateral fans, one facing each direction; by varying their power (they'll probably both be spinning at a low idle while in flight) you provide yaw. Advantage is mechanical simplicity of each fan, disadvantage is having not four, not five but at least six fans, reducing "mean time between failures" of at least one of them increasing required maintenance that much more to ensure it doesn't happen in flight.
Arranging the main four rotors such that each rotor rotates the same way as the rotor in the diagonally opposite corner, and opposite the other two. By reducing the power of fans rotating in one direction and increasing the power of the other, you can induce yaw as the craft will yaw opposite the direction of the faster rotors due to the torque imbalance, without causing the aircraft to also pitch or roll as the total forces in those planes stays constant. The advantage is reducing the need for additional rotors; the four main rotors can provide motion in all three planes. The disadvantage will be slower yaw rates and increased maximum thrust requirements of each rotor basically allowing any two rotors to maintain required lift (a good requirement to have, not a great one to rely on everyday).
Putting the main rotors in tilt mounts and tilting them in rotationally-symmetric ways to induce yaw. It's an intuitive way to induce yaw, and the same tilt-rotor system would also reduce the amount of pitch required of the full aircraft to produce forward motion; just tilt the rotors and keep the fuselage level. Disadvantages include increased mechanical complexity, and the gyroscopic precession induced by trying to tilt a rotating mass which can cause the craft to tumble off its lift vector.


Other potential problems with the quad-rotor design include ensuring reliable power distribution (including maintaining some control if a rotor or an engine gives up completely), the lower inertia of the smaller rotors reducing the effectiveness of autorotation in an emergency, the need by many potential customers to fold the design up more compactly than its flight configuration, and the inherent fragility of the design with ducted fans on pivots in the corners of the aircraft, making it more vulnerable to fatal damage in "combat environments" (translated; everyone not on your side shooting whatever they have at you). Because the U.S. military has been a major customer of rotary-wing aircraft and a primary source of R&amp;D funding, the survivability of the design against things like small-arms fire that a helicopter can typically take a few hits from is a definite point of consideration.

The last problem plaguing the quadrotor is more fundamental, and it is the lack of an answer to this simple question: what can a "full-size" quadrotor aircraft do that cannot already be done as effectively and cheaper with a traditional helicopter? The primary reason quadrotors make good UAVs is that it's easier for a computerized fly-by-wire system to keep them stable, but that is their only advantage to date compared to a single-rotor helicopter, so until the aircar becomes a serious legal and engineering possibility and people want a rotorcraft that is as easy to fly as a car is to drive (or at least easier than a helicopter where you pretty much cannot let go of the cyclic, ever), the quadrotor will likely remain small-scale.