How to hide the Bluetooth icon in the panel?

I believe the correct way, as per the Desktop Application Autostart Specification, is to create user-specific configuration overriding the system default.

1. cd ~/.config/autostart
2. cp /etc/xdg/autostart/bluetooth-applet* .
3. echo "Hidden=true" | tee -a bluetooth-applet*

For 11.10

Alt+F2 and paste the following line:

gksu nautilus /etc/xdg/autostart

Search for bluetooth-applet.desktop and bluetooth-applet-unity.desktop files and delete them (I recommend you to backup them first).

Restart and that's all.

Your bluetooth device needs to be plugged in or turned on for you to edit those settings.

If you want the icon gone altogether, either disable bluetooth in your BIOS (for built in bluetooth devices) or remove the adapter (if you use one).