Likely same or very similar bug on Ubuntu 17.04 with Intel 7260 bluetooth hardware [8087:07dc]. Disabling Bluetooth causes indicator icon to disappear. I can make it reappear again, albeit usually in a disabled state, by enabling Bluetooth in control centre. Then to actually enable, I must enable via indicator as the last step. (Alternatively switch on->off->on in Control centre, which also finally enables Bluetooth again.)

RF-kill and device states:
0. Bluetooth enabled and indicator icon visiable (normal):
- "hcitool dev" shows 1 device
- 3: dell-bluetooth: Bluetooth
	Soft blocked: no
	Hard blocked: no

 
1. After disabling Bluetooth via indicator icon (causing icon to disappear)
- "hcitool dev" shows no devices
- 3: dell-bluetooth: Bluetooth
	Soft blocked: yes
	Hard blocked: no

2. Enable Bluetooth in control centre
Most often goes to state where a device is present, but still soft blocked, and indicator icon reappears in a disabled state. Sometimes it works as expected the first time and fully enables Bluetooth radio.


This is what my system logs tell me when I disable Bluetooth:

april 30 09:52:55 lhs systemd[1]: Starting Load/Save RF Kill Switch Status...
april 30 09:52:55 lhs systemd[1]: Started Load/Save RF Kill Switch Status.
april 30 09:52:55 lhs kernel: usb 1-1.3: USB disconnect, device number 10
april 30 09:52:55 lhs bluetoothd[883]: Endpoint unregistered: sender=:1.3932 path=/MediaEndpoint/A2DPSource
april 30 09:52:55 lhs kernel: Bluetooth: hci0: turning off Intel device LED failed (-19)
april 30 09:52:55 lhs systemd-rfkill[17256]: Failed to open device: No such device
april 30 09:52:55 lhs bluetoothd[883]: Endpoint unregistered: sender=:1.3932 path=/MediaEndpoint/A2DPSink
april 30 09:52:55 lhs dbus[865]: [system] Rejected send message, 3 matched rules; type="error", sender=":1.3932" (uid=1000 pid=12977 comm="/usr/bin/pulseaudio --start --log-target=syslog ") interface="(unset)" member="(unset)" error name="org.bluez.MediaEndpoint1.Error.NotImplemented" requested_reply="0" destination=":1.17" (uid=0 pid=883 comm="/usr/lib/bluetooth/bluetoothd ")
april 30 09:52:55 lhs dbus[865]: [system] Rejected send message, 3 matched rules; type="error", sender=":1.3932" (uid=1000 pid=12977 comm="/usr/bin/pulseaudio --start --log-target=syslog ") interface="(unset)" member="(unset)" error name="org.bluez.MediaEndpoint1.Error.NotImplemented" requested_reply="0" destination=":1.17" (uid=0 pid=883 comm="/usr/lib/bluetooth/bluetoothd ")
april 30 09:52:55 lhs dbus[865]: [system] Rejected send message, 3 matched rules; type="error", sender=":1.3932" (uid=1000 pid=12977 comm="/usr/bin/pulseaudio --start --log-target=syslog ") interface="(unset)" member="(unset)" error name="org.bluez.MediaEndpoint1.Error.NotImplemented" requested_reply="0" destination=":1.17" (uid=0 pid=883 comm="/usr/lib/bluetooth/bluetoothd ")
april 30 09:52:55 lhs systemd[1]: bluetooth.target: Unit not needed anymore. Stopping.
april 30 09:52:55 lhs dbus[865]: [system] Rejected send message, 3 matched rules; type="error", sender=":1.3932" (uid=1000 pid=12977 comm="/usr/bin/pulseaudio --start --log-target=syslog ") interface="(unset)" member="(unset)" error name="org.bluez.MediaEndpoint1.Error.NotImplemented" requested_reply="0" destination=":1.17" (uid=0 pid=883 comm="/usr/lib/bluetooth/bluetoothd ")
april 30 09:52:55 lhs systemd[1]: Stopped target Bluetooth.


Not too pretty, even though most complaining seems to come from Bluetooth audio integration. 

And here's when I enable:


april 30 09:55:32 lhs systemd[1]: Starting Load/Save RF Kill Switch Status...
april 30 09:55:32 lhs systemd[1]: Started Load/Save RF Kill Switch Status.
april 30 09:55:32 lhs kernel: usb 1-1.3: new full-speed USB device number 11 using ehci-pci
april 30 09:55:32 lhs kernel: usb 1-1.3: New USB device found, idVendor=8087, idProduct=07dc
april 30 09:55:32 lhs kernel: usb 1-1.3: New USB device strings: Mfr=0, Product=0, SerialNumber=0
april 30 09:55:32 lhs systemd[1]: Reached target Bluetooth.
april 30 09:55:32 lhs kernel: Bluetooth: hci0: read Intel version: 370710018002030d00
april 30 09:55:32 lhs kernel: Bluetooth: hci0: Intel Bluetooth firmware file: intel/ibt-hw-37.7.10-fw-1.80.2.3.d.bseq
april 30 09:55:33 lhs kernel: Bluetooth: hci0: Intel Bluetooth firmware patch completed and activated
april 30 09:55:33 lhs bluetoothd[883]: Failed to obtain handles for "Service Changed" characteristic
april 30 09:55:33 lhs bluetoothd[883]: Sap driver initialization failed.
april 30 09:55:33 lhs bluetoothd[883]: sap-server: Operation not permitted (1)
april 30 09:55:33 lhs bluetoothd[883]: Endpoint registered: sender=:1.3932 path=/MediaEndpoint/A2DPSource
april 30 09:55:33 lhs bluetoothd[883]: Endpoint registered: sender=:1.3932 path=/MediaEndpoint/A2DPSink

(In the above log examples, Bluetooth enabling worked as expected. I do not yet know what conditions are required for it to not fully enable the first time, which is what I usually experience.)