Source for optical encoders and strips?

I guess I should give a short intro about myself before getting down to my
question. I'm a 21 year old chemical engineering student with an interest
in metal working, mainly for home gunsmithing and making small items like
Burr puzzles. I usually do not do many projects that requires
super-precision, +/- .001" is the normal tolerance I have had to work with,
but would like the convience of DROs.

I have a 2HP 16 3/8" Enco Mill/Drill that I am looking to upgrade to DRO, I
have been thinking about using the Steve Lindsay/Art Eckstein design with a
twist. Since I do not have a lathe or access to one, making rollers and
pulleys is out of the picture. Because of this, I am looking at using linear
optical strips and encoders instead of the pulley and rotary encoder wheel
used by both Mr. Lindsay and Mr. Eckstein. So far, the best linear strips
and encoders I can find are from www.usdigital.com but the maxium resolution
they offer is 360CPI, after using all the cycles of the quadrature, the
resolution is only 0.000694" which does not seem to be high enough, nor very
convient (hard to get an even thousandth). Does anyone know of a source for
long (I need a 26" and a 14" strip for the X and Y axis) optical strips and
encoders that have a resolution of 500CPI or higher?

Thanks,
John