You touch on a number of good points here. It's true you need accelorometers measuring and giving feedback a few hundred times a second. Electric motors are the only motors that can respond to feedback that fast. So the batteries will be a big deal on a scaled up quad.

The most important aspect you didn't mention is that they are inherently inefficient. The more blades you have, the more inefficiency is introduced. that's why scaling them up doesn't make much sense.