Acoustic room simulation - Craven's hypothesis
Question 1: The equations (6.7), (6.8), and (6.9) are all consistent, so I suggest that the wording for the definition of $g$ is incorrect in the book.  

Question 2: The brain just hears the time difference and, by experience, can figure out what that means in terms of distance. So the brain has effectively "calibrated" for whatever the usual speed of sound in air is.  I find that hearing things under water (where the speed of sound is about five times faster) makes things seem much closer.