I did a THC for a MIG one time (had to rescale the voltage since it's way below normal Plasma cut voltages). It was based on constant current. The IHS was a real bear. I Guess if you had a way to read the cut current and profile and how that varies with the height (gap) then it would work pretty much the same way a arc voltage sensing.
TOM Caudle
www.CandCNC.com