Just want to put this discussion into perspective.
There is part tolerance and then there is a some reference point tolerance.

You currently say the reference point can be found at a repeatable tolerance of  0.0001 to 0.0002" and you desire a
"last word " or confirmation of that. So if using the encoder,12000 pulses, and the resolution would be
0.000083". So if you had a dro which displayed .000100 difference based on a move and another that displayed .000083 there would be a difference of  0.000017" just based on resolution. I won't even get into the +- of the resolution and practicality for talking purposes.

So from an absolute value which one is correct? Answer is neither.

One needs a standard to relate to. What is the standard you want to use?
The only traceable standard I have for reference in the micro range ( $1250 for a calibration and i think around $3500 new and calibrated) glass standard. You need to view using a 1000x microscope. It's accurate to .000003" @ some defined calibration conditions.

So one may touch off say a 100 times, and then using  some displayed value compared to  the  traceable standard,  figure out just how how accurately / what tolerance / repeatablity they have  in touching off.   Unless you just want to use the encoder as your "standard" which really dosen't have a absolute defined basis and is rather meaningless when compared yet to another non defined value.

Nice stuff to play with on a rainy day and nothing to do.........
RICH