You’re right, signal strength is measured by the phone, but this is just one out of many other RF parameters which are used (to be more precise by the cellular protocol stack which manages the baseband processor) in order to stay in communication with the cellular network.
tawkon’s algorithm factors the above RF parameters (extracted from the cellular protocol stack) against changing environmental factors and personal usage like proximity from the body, and other factors (e.g. using accessories - headset wired or wireless, speaker, etc), to determine the fluctuating levels of radiation a user is exposed to at any given time. Note that published SAR levels are the maximum radiation levels emitted by the phone. tawkon takes this reading a step further by monitoring the real-time exposure to radiation.
We’ve described the technology and how tawkon works in further detail here:
www.tawkon.com/technology. If you’re interested, you can check out our detailed interview with Robert Scoble on Scobleizer where he drilled every angle of the app and technology (and was won-over in the end :-) here:
http://scoble.it/dnTu7k . I’d also be glad to give you a personal run-down over Skype if you like. Just direct message me to coordinate off-line.