5tpi*2:1 =10motor turns/In.*2000cts=20,000cts/in.
20Kcpi*3.3ips(200ipm)=66k cps or 66ksteps/sec
20ksteps/in =0.00005"/step which is half of what you are looking for so using a 500line encoder in quad will give this resolution.
A 1000 line encoder in quad will give 0.000025/step. Which is 40k steps per inch x 3.3ips(200ipm) = 132khz
132/8=16,500khz which is well within mach3's range of output thru the pport
2000 in quad is double that so it would be 32khz which mach3 should run on a good computer or a smooth stepper or other pulse generator.
I had to take my shoes off to do the math, so maybe somebody can check it for me.