You wouldn't need to build a seperate z-axis to use this item. There is a 3/4" shank on the back side that would fit into a collet in your mill head. You run the grinder with air and leave the spindle motor off. I would do a little more research into the grinder as how much air does it use (scfm) and do you have an air compressor that can keep up with it.
As for runout, you would need to contact the manufacture.


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