one axis closed loop control

I've done a lot of study toward making a gear hobbing machine out of
my CNC mill. Books by Colvin, Law, Barber-Coleman, and a very
interesting article in MEW magazine explain the gear hobbing process.
Its one very versatile method of making almost any gear form.

In very short summary, you can hob on a mill by mounting a hob cutter
(I've been buying 'em up on Ebay) in the quill and rotating the head
by the helix angle. You then need a driven 4rth axis to mount the gear
blank in. This could be a rotary table mounted vertically, an indexing
head or something similar.

Then the hard part: Driving the 4rth axis. For many many years this
was done with gearing. The Ivan Law book shows a complex method to do
this with lathe change gears. Today, driving the 4rth axis is done
with a stepper motor in closed loop with an encoder on the spindle.
Basically, the 4rth axis must rotate exactly one tooth for every one
turn of the spindle. The MEW article ('Model Engineer's Workshop'
issue 75, July/August 2001) shows a method of building an encoder and
stepper to drive the 4rth axis. This author must be a total
electronic type. He spent three pages describing how to build a 4rth
axis (the really easy part to understand, for me) and one paragraph
and an electronic drawing showing how to closed loop drive a stepper.
For me, I still have NO IDEA how to construct this.

Right now, I'm building a 4rth axis with a D1-3 spindle nose and worm
gear drive to a stepper motor. This can be used on my CNC mill for
many projects. My CNC control (Ahha Artisan) can drive a 4rth axis,
but its open loop only, as nearly all PC based controls are.

I've been watching for a method to closed loop drive this 4rth axis.
So far, I've only got possibilities:

1. There is a closed loop control used on micro lathes for threading.
It's called "The Frog" and is advertised in HSM magazine. But
you have to use his extremely small stepper - not enough beef

2. It looks like Parker Compumotor Inc. sells a stepper control to
drive a stepper based on an input shaft encoder. Looks very spendy.
Haven't got a price quote yet.

3. Get someone in this NG to tell me how.

Karl