NIOS II Timer Interval Core Question!

You might find it best to write your own timer/counter - then you'll know exactly what is happening.

7.75MHz is (if my sums are correct) 129.03225ns, you aren't going to get the accuracy of a PLL from a fixed frequency counter. I don't know whether you could run a counter at 1GHz - but even that would only give options of 7.692MHz, 7.752MHz and 7.813MHz.

Long term accuracy can be acheived by adding an extra count on some cycles (basically a digital PLL) - but that will give short term jitter.