There is also a similar product from Avago :
http://sensors-transducers.globalspe...8-D2E6D77A7724
with even higher resulution (obtained by interpolation - 30/u or 1440l/mm!)
It would be interesting to find magnetic encoder, similar to the one used for electronic gauges and calipers.. they also have to be cheap (considering a caliper cost $20 .. this is the cost of metal work only).
And the resolution!!! 0.01mm means, 33mm dia will have 10,000 ticks/mm.