*sigh*

I wanted to keep it as simple and stupid as it can be. I have absolutely no experience in programming PLD, no idea how to tackle the problem the way you describe. I might be able to project an in-circuit quadrature counter, but it still would do nothing different than the µC and be vulnerable to exactly the same problem.

Is the HP chip you talk about something like the Agilent's HCTL-2022/32/32-SC ?
http://literature.agilent.com/litweb/pd...0060EN.pdf