I don't know why do you need photodiodes to read the ouputs since it's the uC who is calculationg it.

; On X1 change
if(X1)
Y1 = not Y2
else
Y1 = 1

; On X2 change
if(X2)
Y2 = not Y1
else
Y2 = 1

Like each on is the inverse of the other or 1 (there is ne loop), it only need to be calculated on change of state of inputs.
Using interrupts like you said.
But there will be a problem, usually the 8052 has an interrupt on only one of the 2 edges of signal; datasheet must be checked.
But you can use other input an some logic to detect and have interrupt on the 2 edges.

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Dufour