If you want it to work, I'd follow the 'KISS' principle and keep it very simple. Something as simple and inexpensive as a float attached to a push-rod that drives a pivot arm attached to a potentiometer should work quite nicely for this purpose. In fact, on a much smaller scale, this is more of less how the gas gauge on an automoibile functions.
Another approach would be to attach a cord to the float and fun the cord around a pulley on a 10-turn potentiometer (available quite cheaply from surplus dealers). Attach a lead counterweight to the other then of the cord (after wrapping it around the pulley for a couple of turns). With a linear potentiometer, this should provide a more linear output than will the pivot arm method.
Ultrasonic depth sensors (such as those manufactures by Scully Signal) are generally used only very very specialized industrial applications since they are both costly to consturct, and sometimes produce 'strange' readings. Your easies way to inexpensively implement something like this would be to purchase an inexpensive marine depth sounder (circa $129) and mount the transducer on a board that floats on the surface of the water. Still, most of these cannot relaibly measure depths less tha abut 2-3 feet -- worse sill with the reflections that would be present from the walls of the tank.
The float/potentiometer method is your best bet.