>
> The problem is, what would be a good/efficient way of converting the
signal
> to a form that the '877 will be easily able to use.


Stick it into an opamp configured as a current to voltage converter. You'll
be majorly suprised!
Magnetic transducers produce output current, the voltage is a secondary
effect.  The I to V converter keeps it working into a virtual short circuit,
so the input impedance is very low, and the waveform won't get wierd when
you go fast.  You'll also be able to go faster than you were before.

We made a similar mistake reading credit card heads, (Also a magnet moving
past a coil) I2V is the way to go.