It depends on how strong the transmitter is. You may find that your FSM doesn't give
much indication until you are only a couple feet away from a 1W transmitter. You'll
have to try it with your specific FSM, transmitter and antenna and see for yourself.
I like to use transmitters in the 10mW to 50mW range for hunts in the park - that may
not be enough voltage picked up to overcome the knee voltage of your detector diode.
At half a watt you may see an indication a couple feet away, depending on the meter.
And, yes, you could have problems if there is another strong transmitter nearby. But
if you are hiding for the Cub Scouts, you can probably choose a spot that isn't beside an
AM BC station or a repeater site. Because the FSMs tend not to be very sensitive, you
wouldn't need to be a long ways away to avoid problems.
Adding a single stage of amplification, either at DC or RF, will increase the distance over
which you can detect the transmitter. A single transistor biased just slightly above cutoff,
arranged to read collector (or emitter) current as the base is driven slightly more into
conduction on the positive peaks of the RF, may be enough, otherwise a tuned RF stage
(for selectivity) followed by a detector and op amp can probably provide enough gain to
the point where pick up of other signals becomes a problem.
One thing we did for ELT transmitters (~50mW AM on 121.5 MHz) was to build a crystal set, since
they easily detect the AM, you can simply aim the antenna for loudest signal, and they had
no battery to go bad while waiting to be needed. With these we could hear the signal about
200 feet away, and at 5 feet or so the signal was painfully loud in the headphones. Again, a
single stage of amplification could be added for longer range, possibly configured so that the
battery was only connected when the headphones were plugged in. AM detection works
pretty well for FM signals if you have a narrow enough bandwidth, but you probably won't get
that with a VHF crystal set, so this might not work as well with an HT, but if you can provide
an AM signal on 2m it becomes more practical, and you can adjust the output power for a
reasonable working distance.