Don't forget you can thread mill as well. Mach 3 does do thread milling, but whether you can get it to properly treat your lathe spindle as a C axis remains an open question from what I"ve seen. It does not do rigid tapping, for example. Also, Mach lathe support has lagged mill support considerably, especially for the newer devices such as GRex. Art has promised to invest a bit of time near term improving Mach 3 Turn. You might want to pop over to that board and inquire about how to do what you want to do.
There once was a video of a mill being used as a lathe to make bushings. I've lost track of it, but it was a clever idea. This fellow used the mill's spindle as a lathe spindle, and the table as a lathe gang tooling plate. He had mounted toolholders all around the center, so he could approach the workpiece from a couple of directions to make the parts.
I was reading an old thread the other night and saw this intriguing setup by CNCZone contributor Geof:
He needed to face those 8 aluminum bars to length and drill and tap each end. He says this setup on a 4-axis mill will do the job faster than a CNC lathe. That got my attention. I thought about it, and the answer has to be because he had to drill and tap both ends of the rods. In a lathe that would require manually swapping the rod end for end (unless you have a fancy multi-spindle machine!) and in this setup it all gets done auto-magically.
That video of a mill making lathe bushings and Geof's idea for machining bars really opened my eyes to what some creative out of the box thinking can do.
Just so you don't think I'm a total mill bigot and hate lathes, I read another fellow who had improved productivity by using his lathe with bar feeder to act as a precision cutoff machine. He was just facing and chopping bar to length in order to make blocks to feed his mill. Said it worked out very well for him.
Best,
BW