As the rules stand now, there are no "depth bands" to indicate how deep under the ground the tunneler is, so it can be assumed that they are just below the surface like a shark (without the fin giving it away). Also in the tunneling rules it says it takes one action to surface, so it can be duked out by models who are both tunnelers. Remember that you cannot run while tunneling, so that will affect their confrontation.
@masherking; I'm in the dog camp myself. Los gatos--forget'em.