I am pretty sure (but not positive) that this is a plug-in issue.  As far as I know the Mach4 core doesn't do anything with the index signal except record whether the index is high or low (1 or 0), and then tell all the plug-ins that the index input has changed state.  The device needs to calculate the actual spindle RPM and tell pass that along to the plug-in which in turn tells Mach4.  At higher RPMs, it becomes impractical if not downright impossible for the device to inform Mach4 of every transition on the index input.