Magento – Setting up custom Shipping method based on Weight & Distance

I don't know any module, however you could find a way to include or reorder the checkout process as explained below. It could help you to develop a solution.

I wanted one day add a step in the middle of the checkout process. At the moment, there is no official way to do it, I mean you don't have any events which allows to change the behavior.

The solution I found consist to modify the class Mage_Checkout_Block_Onepage_Abstract. Attention, it's not a classic model, it's an abstract, you can't overwrite it by using the tag <rewrite> in config.xml file.

So, you have to copy the file app/code/core/Mage/Checkout/Block/Onepage/Abstract.php to app/code/local/Mage/Checkout/Block/Onepage/Abstract.php, edit the file by adding (if you use Magento 1.5) or editing (if you use Magento >= 1.6), the method _getStepCodes as showned below. In this case, you can change the order of the steps, add your own or remove steps. Take care of the consequences of such changes.

abstract class Mage_Checkout_Block_Onepage_Abstract extends Mage_Core_Block_Template {
...
/**
 * Get checkout steps codes
 * diglin - method took from Magento 1.6 but add a dispatch and $transport to allow to hook the code
 * 
 * @return array
 */
protected function _getStepCodes()
{
    $data = new Varien_Object();
    $data->setStepCodes(array('login', 'billing', 'shipping', 'shipping_method', 'payment', 'review'));

    Mage::dispatchEvent('checkout_onepage_stepcodes', array('transport' => $data));

    return $data->getStepCodes();
}
}

EDIT

The code I provide here was a code proposed to Magento core team to allow customized steps, that's one of the reason why the Mage namespace and the Abstract are used.

The block checkout/onepage class is also rewritten:

class Mage_Checkout_Block_Onepage extends Mage_Checkout_Block_Onepage_Abstract
{

/**
 * Get 'one step checkout' step data
 *
 * @return array
 */
public function getSteps()
{
    $steps = array();
    $stepCodes = $this->_getStepCodes();

    if ($this->isCustomerLoggedIn()) {
        $stepCodes = array_diff($stepCodes, array('login'));
    }

    foreach ($stepCodes as $step) {
        $steps[$step] = $this->getCheckout()->getStepData($step);
    }

    return $steps;
}

public function getActiveStep()
{
    // diglin - add the $stepCodes to provide custom step
    $stepCodes = $this->_getStepCodes();
    return $this->isCustomerLoggedIn() ? $stepCodes[1] : $stepCodes[0]; //custom / billing Step or Login Step 
}

Matrixrates which is a free module by WebShopApps supports multiple shipping methods being displayed. Seems like that would perfectly fit your needs here, you just set the rules for both standard and priority.