This would be susceptible to fading, multi-path etc. We used to use a
system at the shop made by Tellurometer in South Africa. It used a
10 GHz signal between 2 units across the distance to be measured.
The 10 GHz was just the carrier: the real signals were several switched
ones around 7.5 MHz or so, whose relative phases at the receiver would
read out the digits of the distance down to 10 cm if needed. The units
came with psychrometers (sp?) to measure the relative humidity and
instructions for correction of the measurements due to RH and temp.
They were rather heavy and required an operator at each end.
Current technology uses polarized reflectors, dual polaization TX/RX
and psuedo-random coding of a radar pulse. about the same resolution
at X band, much better at 47GHz. (Only one end is heavy :-)  ).
 
Regards, Stu Beal, VE3MWM, U009@CSX.CCIW.CA,
National Water Research Institute, Burlington, Ontario, Canada.