PeterH,
The reason for the frequency detect instead of simple amplitude detect is that it will be used on a student launched high altitude weather balloon, so at very high altitude, attenuation would put the return ping almost in the noise floor. (This is where freq detection has the advantage over amplitude detection.)
The speed of sound at 1atm and 21C is approximately 29 microseconds/cm. The effect of temperature change on sound speed is near 600 milliseconds/degree C. From this, the resolution should be fairly accurate.
Ps. I am planning approximately a 1foot long audio isolated device to eliminate outside noise.