"one case of 8 it will give you one incorrect count, work it out."

OMG - that is way too high a fault rate. So that solution is down the drain...

"If you want to do it yourself, use a (C)PLD,..... trying to do it in the uC will make you lose since even with the slowest movement you will have occasional vibrations across the borderline. "

I thought it was simple - now I am getting the jitters. Looks like lots of homework to be done now. And this "borderline" stuff is something I hear, when talking encoders - is there no way out of this ?

Raghu