Measuring Distance using Phase Shift
Well, the last question you ask is what really makes this sort of problem difficult.  If the returning signal is at the same frequency as the transmitted signal, it is extremely difficult to separate the two.  However, if you're going to have a transponder on the other end, then you can have a little fun.  Instead of transmitting and receiving at 10 MHz, what you need to do is transmit and receive on two different, higher frequencies, both modulated at 10 MHz.  Say you choose the 2.4 GHz ISM band.  That's probably a good idea because the antennas are small and there are lots of RFICs available that will work in that range.  With a 10 MHz AM modulation, you need 20 MHz of bandwidth (double side bands).  You probably want to transmit on 2.42 and 2.48 GHz as the ISM band is only 2.4 to 2.5 GHz.  This will cover approximately 2.41 to 2.43 and 2.47 to 2.49 GHz.  This leaves a good amount of separation in between.  The transmitter is simple: just generate a 2.42 GHz sinewave and gate it at 10 MHz.  The receiver is just a simple AM receiver, but first you need to isolate the transmit frequency.  Mix it down with an LO of 2.42 GHz and bandpass around 10 MHz with a reasonably narrow bandwidth.  You will likely need an AGC at some point along the way.  After the mixer and bandpass filter, you may be able to get away with a limiting amp.  Anyway, at this point you run your signal through an 10 MHz PLL and then use the output of that to gate a 2.48 GHz oscillator.  It would be a good idea to turn off the transmit side if no signal is being received to save power, this can be done with a peak detector and comparator.  Back on the original transmit side, you do the same down conversion again, and then compare the phase of the transmitted and received signals.  This will give a partial estimate of the range.  You will likely need to transmit a couple of different modulation frequencies to get a better estimate of the range as phase shifts are periodic.  Perhaps gating the 10 MHz at 1 MHz or even 100 KHz.  

This sort of a solution may be quite sensitive to interference due to other devices transmitting in the 2.4 GHz band.  Also, CW detection like this is not very power efficient, nor does it lend itself to more than one system being in operation in the same physical location.  A better idea might be to built it like the FAA builds their radars - ping a transponder.  Basically, it's the same idea - transmit on one frequency, receive on another, but you measure the time of flight instead of the phase.  You can also use higher transmit power on a shorter duty cycle for more range.  It would also support multiple users with unique codes, and the transponders can be set up to reply only if they receive the proper code.  The transmitter and receiver in this case would be mostly digitial, an implementation could use FPGAs to generate and receive the coded pings and measure the time delay.