That would be one way to do the debouce, and it should be fairly effective. You mentioning you have a datalogging PC just gave me a pretty good idea on building one for cheap. I'll have to add that to my toolkit, especially with the upgraded PI hardware. Ardunio and serial could do it pretty easily as well.
Anyway, the debouce would work. In my case, there wasn't much I could do about the valve shifting other than install an accumulator, and though the process was critical, the system of temperature detection and necessary actions wasn't as critical as say, a pressurized chemical transportation or reaction would be.
I'm not sure *exactly* what this process is, but you may also want to store those values elsewhere that aren't visible so you can check them out later.
That aside, if this process is similar to mine in the effect that your oil tank level isn't absolutely vital and you can handle missing a few readings, why spend more time on it.
One last thought here. Is the sensor mounted on the side of the tank? Is it possible that you are getting some kind of turbulent flow into the tank causing the liquid to splash around? Is it a manual-type valve (such as a ball valve) that would jostle the liquid around or such?