Thank you nsaspook for you great help, I'm discussing the idea with my project supervisor.This is a example of what's possible with the correct uC. I don't think it's a very practical device but does show the basic principle works.
http://www.youtube.com/watch?v=f55vWYar0gw&feature=player_embedded
http://www.ecnmag.com/Articles/2009/07/Low-Cost,-High-Resolution-Time-Measurement-Application/