To solve this problem, let's first organize the given information and establish the relationships needed to find \( \tan^2 \theta \).
- Let the height of pole \( AB = h \). Thus, the height of pole \( PQ = 2h \) because it is twice the height of pole \( AB \).
- The distance between the poles \( AB \) and \( PQ \) is 160 m, and \( C \) is the midpoint of \( B \) and \( Q \). Hence, \( BC = CQ = 80 \) m.
- The angle of elevation from \( C \) to \( P \) (top of the pole \( PQ \)) is given as \( \frac{\pi}{8} \). Using the tangent function, \(\tan\frac{\pi}{8} = \frac{\text{opposite (height of PQ)}}{\text{adjacent (CQ)}} = \frac{2h}{80}\).
- Solving for \( \tan\frac{\pi}{8} \), we have \(\tan\frac{\pi}{8} = \frac{h}{40}\).
- Since \(\tan\frac{\pi}{8} = \sqrt{2} - 1\), equating gives us \(\sqrt{2} - 1 = \frac{h}{40}\). This implies \( h = 40(\sqrt{2} - 1) \).
- Now, consider the angle of elevation from \( C \) to \( A \) (top of the pole \( AB \)). The tangent function gives us \(\tan \theta = \frac{h}{80}\).
- Substitute \( h = 40(\sqrt{2} - 1) \) into \(\tan \theta = \frac{h}{80}\), giving us \(\tan \theta = \frac{40(\sqrt{2} - 1)}{80} = \frac{\sqrt{2} - 1}{2}\).
- Therefore, \(\tan^2 \theta = \left(\frac{\sqrt{2} - 1}{2}\right)^2\).
- Calculate \(\tan^2 \theta\):
\[
\tan^2 \theta = \left(\frac{\sqrt{2} - 1}{2}\right)^2 = \frac{(\sqrt{2} - 1)^2}{4} = \frac{2 - 2\sqrt{2} + 1}{4} = \frac{3 - 2\sqrt{2}}{4}
\]
Hence, the correct answer matches the option, \( \tan^2 \theta = \frac{3 - 2\sqrt{2}}{2} \).
Therefore, the correct option is:
\(\frac{3 - 2\sqrt{2}}{2}\)