But I had already decided to use continuous rotation servos, which don't have a second shaft on the non-drive side to mount an encoder disk. Instead, I decided to mount a paper ring of encoder stripes on the inside of a Solarbotics servo wheel. I needed some way to detect the changes between black and white as the wheel rotated.
I found a set of components from Optek on mouser.com that seemed promising. They were a combination of an LED and a phototransistor, packaged together in a trapezoidal case with a screw hole.