it is simpler than you might think: sound travels at 334 meter/second
so you can convert from distance to millisecods using a factor of 33.4
and that is it.
and in a 4 way panning system (a rectangle) the distance from the
source to the 4 corners can be found using simple geometry.
Yeah what he said ^; except I'm no good with the simple geometry :P
A delay of more than approx 33 milliseconds and you'll begin to hear distinct sounds rather than panning. In my patch I've only used a time-difference of 2 milliseconds and it works, so I can't see the need to go much higher than that.