I know how you feel. I have a Dyna Mectronics DM4400 retro fitted with a Gecko G540 but still using the original 160oz steppers. I lose steps during heavy cuts on a regular basis and re homing the machine is an inconvenience with 50ipm rapids.
I'm planning on converting to DC servo's but the options are almost overwhelming.
I've done a fair bit of research on servo's and depending on your budget you have a few good choices.
If you have the cash, go with brushless servos and driver package from Glentek, they have NEMA framed servo's designed for stepper replacement.
But if you have a smaller budget, like myself, I would suggest the Keiling servo's with CNCdrive Dugong drivers.
I've used both the Gecko 203v's and the G540 stepper drivers and the Gecko stuff is top notch. However the 20amp limit on the G320 drivers will restrict your acceleration of the larger servo's that you and I both require.
Some people have mentioned not liking the Keiling servo's, but for the price they are hard to beat. Equivalent sized servo's from a brand name manufacturer will run 5 to 10 time the cost of Keiling motors.
As for position feedback, the encoder usually feeds back into the servo driver. I'd like to put glass scales on my machine for absolute postion but Mach 3 doesn't have the ability to handle the extra position input.
Hope this helps,