There's Etherpad, which is a GPL collaboration verion of Google Docs. There are various example implementations which protect the privacy of your documents, although privacy isn't the issue.
Giving edit access to Google Drive documents is sufficient. The way these files work, once they are shared with a user, the file will appear in their "Shared with me" list
If they remove or delete a file from this list, it will not remove the document from any other user's list, nor will it destroy the file. Only the owner can trash a document.
Learn more about trashing documents here: http://support.google.com/drive/bin/answer.py?hl=en&answer=2494934&p=restore_trash_collab
If the owner trashes a document, they can get it back from their Trash folder:
Learn how to recover a file or folder that you moved to the trash.
If something in Google Drive is moved to the trash, you'll see a
warning and you may lose access to it at any time. Read one of the
following sections to learn how to restore it to your Google Drive
from the trash. When you restore something, it'll be recovered in
Google Drive on the web, to the Google Drive folder on your computer,
and to your mobile devices.
If the item is in a folder, you’ll need to restore the entire folder
to recover any individual items inside of it.
Owners
If you're the owner of something and you’ve placed it in the trash,
you'll see a warning that reads "This item is in your trash" when you
open the doc or file.
If you’d like to restore a doc or file to your Google Drive:
Search for it in the Trash. Select the file(s) or doc(s) you’d like to
recover. Click the Restore button.
Folders and file structures behave the same way, if regular editors remove these it will disappear from their "Shared with me" list but it only affects them, not the rest of the collaborators.
Best Answer
Yes, the files do infact get removed. This is the whole idea of the syncing feature. As long as Google Drive is running and there an internet connection, then the files will be synced with the server. Part of the sync process is adding AND removing files, so that the files appear as they do in the browser.