IO540,
DME-DME systems are in regular use and coupled to FMS and EFIS provide full RNAV and Moving Map.
The principle is very simplar to GPS i.e. if you have 3 distances from known DME positions then in general terms there is only one place on the earth you can be.
I don't know about your DME but my DMEs give constantly updated indications when tuned to stations within range. If you have 3 of those feeding into a computer, you can get RNAV and Moving map no problem.
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A and C,
There are two problems. Firstly the cost of 3 DMEs and the associated equipment to do all the computer stuff.
The second one however, is probably the most limiting because even if you have the deep pockets to purchase the system, as you know a DME is very power hungry and try putting 3 of them into a system plus the extra stuff and your average light aircraft will be overloaded in bot electrical and empty weight limits.
Regards,
DFC