Two notes about lag effects on distance estimation.
First, it is a variable. I've seen lag discrepancies in films from 2 viewpoints from nil to 400 or so yards depending on connections and network conditions.
Second, lag is dependent on speed and closure rate. That's why you need to leave a LOT more margin in a head-on situation than a tail chase. If a bogey is closing on you head-on, the high closure rate will mean the number difference is larger, even if the lag time is constant. This is why I start my HO evasive move at about D 1.4 on a nose to nose merge. At high closure I can see as much as a 500 yard difference in ranges sometimes. If somebody is chasing my tail but not gaining quickly, I can generally feel safe around 1.1 or so. Depending on speed and closure, the allowance for lag in a tail chase is much lower, I usually allow for 200 or 300. Now maybe it will be less, but it's better to be safe than... erm.. dead.

This is why you hear folks whine about 1k shots, but you will never see a film from the shooter's perspective that shows anything out of whack.
Sorry to Hijack CavemanJ.

I think that a self-adjusting perk system based on kills or even flights is the only way to go. I really don't care how "good" a plane is, I just don't want to see any single plane making up 30% of the population when I go flying. So far Pyro's perk system is the best way I've seen to keep things in check.
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Lephturn - Chief Trainer
A member of The Flying Pigs
http://www.flyingpigs.com "A pig is a jolly companion, Boar, sow, barrow, or gilt --
A pig is a pal, who'll boost your morale, Though mountains may topple and tilt.
When they've blackballed, bamboozled, and burned you, When they've turned on you, Tory and Whig,
Though you may be thrown over by Tabby and Rover, You'll never go wrong with a pig, a pig,
You'll never go wrong with a pig!" -- Thomas Pynchon, "Gravity's Rainbow"