What I've read somewhere else is that this has nothing to do with Mode S at all. Obviously the UAVs will be equipped with some sort of TCAS but Mode C is good enough for TCAS.
When they talk about the "safety measures" what they are referring to are things like optical and infrared cameras mounted to the airframe and downlinked to the operator on the ground who monitors them, computer assisted of course. And the article I read (can't remember where though) claims that initial research suggests that operators are able to pick up traffic using this setup that they never would have picked up in a manned aircraft with the Mk 1 eyeball.
So it looks like optical and infrared cameras are good enough for a human to spot traffic and initiate see-and-avoid. From that it's only a small step to let the computer come up with a solution advisory and initiate avoiding action.
And obviously computers never get distracted, can be configured so that there's no blind spots, and so forth.
You might want to do a little research there
BackPacker 
Some extracts from a recent article -
...There are reportedly 185 small Raven UAVs in Iraq and Afghanistan, and at least one midair collision has occurred in Iraq between a Raven and an OH-58D helicopter.
...Scarier still was a near miss between a German military Luna UAV and an airliner with gear and flaps down on approach to Kabul...
...With 300 UAV programs worldwide and billions invested by the industry, momentum is building for these primarily military vehicles to cross into commercial territory
...What if a nonmilitary drone remotely piloted from the U.S. by a civilian employee of a government contractor landed on a rooftop in France? Or a foreign-owned, commercial drone crashed into a home or business in the U.S.?
My bolding, and full article at -
Avionics Magazine :: Input/Output: UAVs and the Regulatory Gap