I made some limit switches from Hall effect switches.  I posted pictures and a description here:
http://www.cnczone.com/forums/showthread.php?p=541846#post541846
The bottom line is they have a repeatability of +-0.00015” and cost $2.30 each.

Vince

Thanks for sharing Vince, but I'm guessing if you don't have these in a housing (like you do for the Z axis), the magnet would pickup any magnetic dust making these a problem, correct?

Did you only fit these on the Z in the housing? If not, I'd love to see how you fit them for the X and Y 

Dave

For now, I am going to keep the factory installed X and Y mechanical switches on my mill.  Like you saw in the pictures, the Z limit switches are completely enclosed in the quill housing where no chips go.  On my Hardinge CHNC, the Z axis limit switch is on the side of the bed away from the spindle.  I have never noticed any chips getting stuck to the magnet.  Hardinge uses a much bigger magnet, about 1/2" in diameter so they can mount the Hall switch further away.  If you had some dust that was magnetic, I could see that sticking to the magnet much easier.  On my mill the mechanical limit switches are mounted under the table where I have not found any chips, but I don't mill anything the makes magnetic dust and I usually use coolant that would keep the really small particles (like when machining cast iron) out of the air.

Vince