S[indle control depends entirely on what you want. By the sounds of it the spindle is controlled by a VFD so you could find out what input it takes to control the speed and get one of the boards that will output that signal when Mach tells it to. ie it may need 0-10v input to the VFD to vary the speed, some are 0-5v etc.
 However you may not even wish to control the speed from Mach, nothing to stop you keeping it the way it is now and just manually adjusting the speed.

Motor size I am not sure on, depends on the forces required to move the axis, would think 916oz/in  would be plenty  especially if you gear them 2:1.
 When looking for encoders make sure they are ttl.

Hood

Tim,
No way am I an expert manual woodturner but this picture shows some of the pots that I have produced. The biggest is about 125mm tall and all were made on a 3 in 1 manual lathe. All curves are circular with the toolpost bolted to an arm extension on a rotary table fixed to the lathe bed. The tool shown is about 10mm square and the top rake was generated with a 10mm diameter mounted point grinder. A Mach version would not need the rotary table and would allow for more varied profiles and it might get made someday.
As an example of CNC woodturning, how about a baseball bat in 1 1/2 minutes!

http://uk.youtube.com/watch?v=ov3awRWfVJc


Ian