That's the high school way of doing GPS velocity. :) Doppler and/or carrier phase shift calculations are generally much more accurate for measuring instantaneous velocity. And that's how most GPS receivers do it. There's one set of algorithms to do the least-squares stuff on pseudoranges to calculate positions, and another set doing carrier phase stuff to calculate velocity.

But I agree that Garmin (who know a thing or two about GPS) should be able to detect poor velocity measurement conditions and use some simple modelling techniques to estimate what velocity might be. And then use post-processing once the satellite signals are regained to improve those estimates given the new information.