"So whats wrong with flying 2/3 circles, I often circle in wave. In any case
Paolo Ventrafridda developed a method for LK8000, of flying S & L on one of
several headings for say 10 secs at a constant airspeed.
If the will is there, it can be done, and even if slightly imperfect, it
would be better than the present almost always wrong indication.
However another approach would be a way of manually putting the wind into
Flarm, using the vario/navigator readout, which I'm sure everyone flying
with Flarm, is equipped with as well. "

Nothing wrong with circling, but pilots aren't going to stop and circle just to improve the accuracy of their wind calculation. It comes down the to quality of the data being fed to the device. Whether derived internally or fed from an external source (such as the PNA's you suggest), unless it's always accurate it, it's going to result in inaccurate relative bearing information. To the best of my knowledge, Flarm presently resolves traffic warnings as a relative bearing based on *track*. It may not always be accurate with regards to *heading* but at least it's consistent and thus can be allowed for by the pilot. The only time things go to pot is when roughly holding position in wave. If Flarm was alternating between heading and track based relative bearings, based on the accuracy of the wind solution at the time, you'd never know where to look.

CJ