Mark:
You might want to check out the following vendor:
http://www.lsicsi.com/encoders.htm
US Digital sells some of these chips:
http://usdigital.com/products/interfaces/ics
A number of us in the club have used the LS7366 which is a 32-bit
encoder with an SPI interface. I'm pretty sure I have some left
in my parts drawers. These are DIP parts. Let me know if you
are interested.
The trade-off space of selecting a microcontroller is quite complex.
Unless you are going build thousands of something, the part cost is
really not that important. What dominates the everything is learning
curve -- figuring out the software development chain, understanding
the microcontroller quirks, dealing with cruddy documentation, lack
of decent debugging tools, etc. If you enjoy this stuff, go for it.
If not, I recommend sticking with AVR's for 8-bit and ARM's for 32-bit.
Regards,
-Wayne
[snippage]