Found a really nice one.  Yup,  way to big and a ton of $$.  I haven't gotten back to the data sheets on the 2048 ppr unit yet.  I'm not at all sure that's not the maximum resolution after decoding.

-----Original Message-----
>From: "Alan B. Pearce" <A.B.Pearce@rl.ac.uk>
>Sent: Aug 26, 2008 1:41 AM
>To: "Microcontroller discussion list - Public." <piclist@mit.edu>
>Subject: Re: [EE]: Shaft Rotary Encoder
>
>>We're getting (analog) resolution of about 500 points
>>in 90 degrees.
>
>You say you want 1024 in 90 deg, that's 4096/rev. I don't think I have ever 
>seen anyone quote that resolution. If anyone does it will be real expensive. 
>
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