PIC DRO Revisited

Hi,

I have been programming PICs for a few years, and am cosidering
making a 3 axis DRO. I would be more than glad to share my
design,code,schematics with all. Having never worked with a DRO, I
have a couple of questions. How does the DRO know which direction the
motor is going (so it can increment or decrement). Also what
properties do the average encoders have (e.g. opto
using a 5 volt supply, hall effect) do they pulse a signal out or
need a supply voltage etc.

I was thinking of using a seperate color of LED diplay for each
axis. Besides a button to zero each axis are there any other features
I need to consider?

Thanks

Glen Benson