What could possibly be illegal about it?
http://www.faa.gov/about/initiatives/uas/reg/
I’m no expert, but am guessing they could have broken at least half a dozen laws. At the end of the video, their faces are blurred. I wonder why? At a certain point, your RC toy stops being a model airplane and becomes a FPV/RPV, then different rules apply.
Here are some rules.
http://www.rcgroups.com/forums/showthread.php?t=911761