I had a simillar, albeit, much slower experience. I was able to have much faster speeds earlier on for the intervals. As the jogging stretches got longer I found it more difficult to keep the faster pace. I stalled in Week 6 and ended up repeating one workout since I was too tired to finish it correctly the first time. I brought my pace down to 5.2 mph (I use the treadmill speeds) and eventuially worked it back up to 5.5 mph and was able to maintain that for the 30 minute runs in week 9.
I completed my fist 5k on Sunday at 34:19. Not exactly a speed record but I didn't stop to walk and finished strong at the end so I felt good.
I tended to measure my progress, at least in partt, by whether my total distance was increasing from one workout to the next. Since I was running mostly on a treadmill I just used the total distance as my measuring stick. I always did the same warm up and cool down pace (4.0 mph) so that was a constant.
I don't really understand your last comment. I don't recall my C25K estimating my distance BEFORE the run. I just always input the distance after the run on the treadmill. I did run outside a couple of times and that was cool to thave the GPS show the map and breakout the walking v running times and distances.
You have to find the balance that is right for you in terms of pace and how long you can keep that pace. Don't be afraid to repeat a workout, or a week, if you want to try to increase your pace. However, for me, I got comfortable with reducing my pace and focusing on jogging for the entire alloted time. No my goal is to continue to run and work on bringing my speed up.
You are making great progress, keep going!