Increasing DRO resolution

This has probably been dealt with before but I can't find it in the
archive.
It has been said on this group that encoders should, ideally, have
a resolution 10 times greater than that which you wish to display.
Therefore to display measurements down to 0.0005" (½ thou.) the
resolution of the decoder would have to detect movement of 0.00005".
Art Eckstein shows on his webpage http://ns1.dicomm.net/~axtein/ how
he used mechanical advantage to double the resolution of his system
when using rotary encoders.
Has anyone succesfully adopted Art's system but, instead of driving
the encoder directly, driven it by a precision toothed belt to give
a mechanical advantage of say 10:1?
Paul