A very interesting circuit, and probably a reliable indication.
As for the LC tank circuit, if you want a stable freq then a xtal osc as you probably know gives a stable o/p, I dont know why you want a lc osc circuit, unless the l is the pickup inductor if thats the case than you could 'ping' the lc tank with the micro and count the number of rings or the duration of rings with a simple circuit maybe using the micro's comparators and counter/timers.
If you really want a continuous oscillation then maybe you could look at building a xtal disciplined (I think that what they are called) oscillator, I've seen these used for fm transmitters, where the xtal controls the centre freq to an extent but the actual freq is modulated by an external audio input, might be worth googling.