Seems like you may be over thinking this. When I was in consulting, I didn't waste my time trying to track every 5-minute increment, the amount of effort and distraction that would cause would do more harm to the client (due to productivity loss from tracking) than anything else. Taking a 5-minute coffee break, or chatting with a co-worker for 15 minutes all gets lost in the noise if you are working on a project for multiple hours a day. Your level of focus (which is nearly impossible to quantify) is going to have a bigger impact on your productivity, and hence the value to the client, than almost anything else. So it makes sense that you should look to optimize for focus/productivity, rather than 'time spent sitting in front of computer'.
On a side note, there has been a lot of talk on HN about billing clients in half-day and full-day increments. You should probably look into that. At the consulting job, I basically took the total number of hours a day that I was working, and roughly divided it by the percent of time I spent on each project, which also worked for me (we were required to bill hourly). In the long run, it all tends to even out, and as long as your client is happy with the work, and the costs are in line with their expectations, they will not complain.