The UHF antenna aperture is the sharpest, and even it is like +- 15degrees. The VHF antenna is more like +-30degrees. The gear train in the rotator requires 2667 revs of the motor shaft to produce 360 degrees of antenna rotation, so that is about 7 pulses per degree. I will have more than enough resolution, even with only 1 pulse per motor revolution.
I do not need a quadrature encoder because the PIC apriori knows which direction the motor is turning (the PIC controls the direction relay). There will be an unsigned 16 bit int in the PIC which represents the current position. It will be decremented or incremented based on the rotation direction. That counter will be converted to degrees for display on an LCD.
Keeping the PIC's counter synchronized with the actual antenna heading will be relatively straightforward. Assuming the PIC is always powered, it can keep track of the last position. If the antenna array is moved by strong winds (pulses without a Move command) , it can know that the calibration has gone off, and it can do a recalibration on next power up. If Power is lost, the current heading can be written to Flash, and retrieved on next power up.
The rotator has mechanical stops at about -10 degrees and +370 degrees. The pulses stop as the motor stalls. Being the type of motor it is, stalling it is harmless. The PIC will know that it just ran into the stop, and will know which end of the travel it is at, so it can zero (or set to 2670) the counter. A recalibration can be done any time by just having the PIC drive the rotator to either stop.
As to the two-wire method, I think I have it solved. It turns out that the main power transformer secondary, motor windings, capacitor, and direction relay are all isolated from ground. I connected the motor common lead to the PIC's 5V supply through a current limiting resistor which lets me feed the LED emitter in the opto-interrupter between the motor lead and the ground wire. The collector of the photo-detector transistor is thus isolated from emitter circuit, and can utilize just two wires, for a total of five.