I used encoders from
http://www.usdigital.com/
and they were the "cheap" 500 line E2 units.
I have some 1000 line left from my DRO project, but the computer ran out of steam in order to use them to the maximum advantage.
Mariss of Gecko fame has published some guidelines of what you can expect preformance wise out of any given circumstances. Based on his recommendations, I found the 500 line encoders (attached to the lead screw) to be the best for ME:})
I can't break the elusive 100 IPM rapid, but then again; I only have about a 16" max travel on the X axis and 5" on the Y so it can still seem scary when I go stop to stop
My recommendation is to go for a servo with as high a Kt as affordable, and then fit the drive train and power supply to fit. Do the math first, and then build to suit. Paper is cheap compared to changing power supplies etc.
Bubb