Siberia, I don't know much about programming computer vision algorithms, unfortunately... but that'd be damn cool.

Also, I'm planning on doing this with microcontrollers, and for webcams I'd need a full OS.
Chairboy, ultrasonic/sonar units are out of the question, for the precise reason you stated. They're for very limited range, low speed applications. I'm shooting for a radar/laser combination, or just radar if it comes down to a choice.
Actually, I am planning on tieing it directly to my Cruise Control, and putting an actuator on the brake line. If the speed of the car ahead of me drops, the gas will release and the brake will apply slightly (or more than slightly if the accel of the car ahead goes into negative very rapidly) until speed is evened out, and an alert will sound if the deceleration is over a specified limit. I haven't worked out the precise way I want to program this, but I'm thinking that I'll enter values for speed vs min distance that I want the car to keep.
Sonar is out of the question. The problem with laser is that it has such a limited coverage area. Most of the cars that have smart cruise control via laser are not as effective as those with radar, and nowhere near those with both systems in place.
At the end of the day, I envision spending somewhere in the range of $1,000 for this. If it goes over a little, depending on the reasons, I might go higher.
Arkadiy... I doubt most cars with smart cruise control have only one sensor. I don't know how good a coverage you'd have that way.. and with 2 or more sensors you can zero in on the general shape of the object ahead. I was thinking of maybe even implementing the steering wheel's angle into the calculations... so when the wheel is tilted, more emphasis is given on the sensors on that side.
I wouldn't need fast processors at all. I'd just need to analyze the data from the sensors, and run them through some algorithms to determine what to do. Not too complex at all, and nothing that today's Mhz range microcontrollers can't handle.
And you're right about today's cars. All they do is disable gas so that you coast down to a lower speed. I'm not sure if smart cruise control cars are different in that they can also take the distance to the car ahead of you into account so they know when to stop with the gas. I'm not sure if any of them actually apply the brake... I doubt it.
The Durango Kid... what's so nuts about it? It's just some calculations and some I/O on a microcontroller.
