Steve, thanks for that pointer. Things are very well explained indeed. Clarified some things, but am still not out of the woods yet.

Is my understanding correct here?

Slowest speed to be measured is 300 rpm. That is 5 Hz.
Maximum time to be measured between consecutive high going edges is therefore 200,000 us.
Therefore, T1, set to a prescaler of 1:4 should read 50,000 for a frequency of 5 Hz?

This is at clock frequency of 4 MHz, Capture configured to increment every rising edge.