Yep, actually fixing the problem is a much better route than working around it. Doesn't take long to scrap $600 worth of parts, and you'd still have to buy the encoder.
Here's another Okuma problem I'm wondering if you might have any input on. A buddy of mine has an LC-20 with a 3000 control. The spindle drive on these uses fuses instead of the breaker like a 5000 uses. He's been having intermittent problems with fuses blowing as the drive decelerates the spindle after an M5. Never does it on spindle start. Usually shows up on short cycle high speed parts. He's putting in an S command to drop the speed once the cycle is done, but before the M5, and this seems to work for now. The Okuma rep's man says he has no idea, but that they could replace the spindle drive and see if that helps. Kinda like putting an engine in a car to see if that'll cure a miss