>>>If you allow telecommuting it should be simple. I was involved in something exactly like this for about 18 months. We were working on a project (a HUGE project) for a company in Boston, there were 4 (sometimes 5) programmers and one guy who acted as the project manager. I was in FL, one guy was in CA, the others were scattered somewhere in between. If you stay organized enough, use instant messengers and plan conference calls it works out really well.
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>>This is one of schemes where it's not "location, location, location", it's "communication, communication and source control".
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>Exactly! We had to communicate every day and eventually I setup a SourceOffSite server to handle version control.

It seems that SoS has become the industry standard. Saved my {UT cleaned a word here} several times during the last two years. I just love telecommuting, even though it does take some commute as well (the ten steps between breakfast and keyboard - still not zero).