David,
Think DoD. Location of enemy shooter. Target to shoot at. Analysis of damage. It works with audio, why not light with far greater precision? Yes, it reduces HD images to 256 x 256 images--that's quite enough for a targeting sensor. And the resolution will increase. Just take a point and shoot 16-Mpixel sensor and expand it to DX or even much larger formats.
That $50M venture money is doled out in carefully measured portions.
If you can do it with sound and light, well, why not in between with radars? This looks to me like a next generation radar, which is already pretty sophisticated. Or probably a next-next generation.