Whatever you do with a laser range finder your problem is the speed of light is incredebly high. In a single nanosecond light travels 30cm. If you really need a resolution of 1-4mm you are talking about a resolution of 25ps or better in the time scale. Or if you want to put it in the frequency scale thats 40GHz or better. Measuring something like this is possible but it is not easy. I just googled for laser range finder prices and you basically see a direct link between increasing resolution and fast increasing prices. If you want to try to do something like that yourself it might be worth to have a look how the short pulse laser community is measuring their laser pulses. They have to deal with the picosecond, femtosecond or even attosecond timescale on a daily basis.
By the way be careful with your 50mW laser diode. It is most definetely powerful enough to harm your eye seriously. You might even be able bo burn your skin. A laser diode like that shouldn't be operated without proper eye protection.