Most automotive LIDARs just report the time of the first return, but it's possible to do more processing. Airborne LIDAR surveys often record "first and last"; the first return is the canopy of trees or plants; the last is from ground level.
It's also possible to use range gating in fog, smoke, and dust conditions.[1][2] Returns from outside the range gate are ignored. You can move through depth ranges in slices until something interesting shows up. This seems to be in use for military purposes, but hasn't reached the civilian market yet.
Range gated LIDAR imagers have been around for at least 15 years. By now, it should be possible to obtain a full list of returns for each pixel for several frames in succession, crunch on that, and automatically filter out noise such as rain, snow, and dust. It's a lot of data per frame, but not more than GPUs already handle. Some recent work in China seems to be working to make range-gated imaging more automatic in bad conditions.[3]
[1] http://www.sensorsinc.com/applications/military/laser-range-... [2] http://www.obzerv.com/en/videos [3] http://proceedings.spiedigitallibrary.org/proceeding.aspx?ar...
"Well, there's your problem right there, let's just slap on some strong sensors and you should be good to go!"
You know what has a weak sensor system? Any car without any sensors.
On one hand, not pulling in potential safety improvements because they only work in good weather seems wrong, but on the other hand...that might be what needs to happen from a cost/marketing/legal perspective.