@ sideris --
The solution to me seems to junk their controller. It's terrible.
What I've done is wire up 2 parallel ports to a G540 controller from Geckodrive. There are just enough input pins on both these ports to support all 4 encoders without adding any sort of 3rd party board.
The only issue with the G540 is that most MosChip based parallel port cards don't seem to go into "epp" mode, which leaves some of the output pins in the "open collector" state. This means that certain functions of the G540 will not work. Namely, the CHARGE PUMP. I'll spare you from my gripes about this, but I solved it by running a different pin from the 2nd parallel port that wasn't one of those open collector pins (D3 in my case) to the charge pump.
The encoders just need to be supplied with +5 volts and the controller with +40v (from an ebay switching power supply), the output of the encoders into the inputs on both parallel ports, and the limit switch connected to the G40.
The end result is that I now have everything running... WITH THE ENCODERS!
I am going to write a "brain" for Mach over the next few weeks that simply shuts down and flags an error if the encoders get out of sync. This is the whole reason to have the encoders IMHO, and not to "close the loop". This should prevent a crash and make the encoders worth their weight in gold to me

Trash that controller! The G540 runs the maxnc so smoothly you wouldn't ever want to go back. I think they had high school interns design their controller back in the 80s with radio shack parts... and they didn't bother to refine the design over the years like normal engineers would want to do either.
ALSO - On the motor controller... they have a solid state relay in there. I had to order another from digikey, but it's the cheapest solution I've ever seen. It works and is pretty good for the price so I'm still using the method. Here it is:
Solid state relay ---> Rectifier ---> motor.
The solid state relay has an LED that you can hook up to the parallel port directly through a resistor (330 ohms in my case). One side of the AC mains goes into the rectifier directly. The other is switched by the solid state relay. The output of the rectifier goes into the motor.
This does suck a bit because if the relay is on for even a fraction of the AC sine wave cycle, it's on the entire time. Consequently I can only get it to work with PWM frequencies of 30 hz or less, which doesn't really seem like much resolution.
Maybe one day I'll upgrade to a real motor controller, but it works for now.