Can you set a photon 2 to promiscuous mode and look for the nearest packets rssi value then use it's mac to determine what device your nearest to?
Or is there a better way to do this using beacons, or some other method?
You cannot use the Wi-Fi module in promiscuous mode.
You could search for BLE beacons, but of course you need to have a number of BLE beacons, and using them for positioning is difficult and unreliable. The reason is that the only metric available is signal strength (RSSI), and this can be affected by a number of things, including people walking between the beacon and the device, and the relative orientation of the antennas, making it hard to get an accurate triangulation.
BLE beacons are good for their intended use case: for detecting a phone (or Particle device) is right next to a beacon, for example a store display.