Can an iOS7 device act as an iBeacon and figure out when other iOS7 devices come in its range? Do those other iOS7 devices need to have Bluetooth turned on?
An iOS device with BluetoothLE can act as an iBeacon yes.
Check out the AirLocate example code at https://developer.apple.com/downloads/index.action?name=WWDC%202013#
Being an iBeacon doesn't give feedback about devices that come into range so you'd have to implement that yourself. ie you'd have to have the devices that detect the iBeacon then tell the iBeacon they'd seen it through some other means.