Why not add Elevation?

1. Add an option in the token menu to Set Elevation 2. Represent the elevation with a transparent cylinder as shown (Kind of) in the example 3. Calculate the hypotenuse when dragging the ruler from one token to another 4. Profit

That works as long as the two characters are on the same horizontal plane, but as soon as you move the observer up or down on the map, the distances are askew again.  Edit: unless you mean the ruler should make the calculation based on if the start and end points are on tokens and one or both of them have elevation - which would massively expand the scope of what the measure tool does.

I'd rather have the elevation be a token attribute with a token marker-like display that only appears when its elevation is non-zero, and have the measure tool look at the relative difference between the elevations of two selected tokens and use that to calculate the true distance. Also, make negative elevations possible for instances where a token ends up below a map's zero-plane (crevasse, pit, shaft, etc.) An option might need to be added to the measure tool's menu for "Snap to Token" in addition to "Snap to Center", "Snap to Corner" and "No Snapping", or even a separate tool for measuring between tokens.

Thats pretty much exactly what my suggestion was lol

I'll throw a +1 in for the basic idea.   I don't think the cylinder view is needed, but an elevation you can easily set would be useful.  Right now I use one of the red/green/blue circles for this (just did an underwater adventure where it was needed), but there are a lot of uses for those and it would be nice to have something that also worked with the ruler. Note that elevation should be relative (underwater, there may not be a "ground level" on the map, just open water.  So negative numbers should be part of this.