To restate everything clearly,

Methods of using an optical encoder with 8052, 2 pin method, 4 state, relative position, gray code.

Alfredo (clocked, or interrupt) method: use 1 pin for interrupt (or clock), the other for direction of counting.

Polled method: 8052 polls both pins at a rate exceeding the maximum rate of rotation (8052 never missing a state change.)

The alfredo method works "good enough" if you are not interested in exact position without errors.

A machine atached to the encoder will cause positional errors (1 in 16 times, according to erik).

A human turning the knob could easily put it into the position before the interrupt and after the interrupt, causing multiple interrupts without the direction changing.

For human input, there are devices with detents, which make the user go through all 4 states without stopping. Then the alfredo method is acceptable.

For precise movement, the alfredo method is not acceptable. The 8052 must see each of the 4 possible states (polling method), and must be able to sample faster than the states change.