Nice work!
Have you decided on the machine control? (mach/emc2/turbocnc/other)? Emc allows you to use an encoder with index. (you would want to look at around 100 line or so if you are counting thru the printer port. Then the top spindle speed is determined by how fast your computer can count) A decent computer with a 100 line (400 edges) should be able to count up to 3000rpm. (yes emc can also do single index threading) Some have also made their own encoders with index.
People thread on mach all the time. (The same as you - I wonder how well )
some have switched from mach to emc have have said it is much better but I have not used mach. They say the threads come out better and think it is neat that they can lean into the spindle to slow it down with no change in the thread finish.
http://article.gmane.org/gmane.linux...athe+questions