Mike - the problem is that you can't measure the position of the mirrors as accurately as the Peachy can drive them. As jontelling has said, the Peachy can apparently do 262144 counts over a range of about 40 degrees, giving it an angular resolution of 0.00015 degrees. The encoder you linked manages just under 0.2 degrees angular resolution. If you're trying to use all of the Peachy's precision, you might drive the mirror to 8.20305 degrees - but the encoder will only be able to tell you that it's somewhere between 8.2 and 8.4 degrees. You can't verify that it's at exactly the right position.

With that said, the encoder could be used as a relatively coarse check that the mirrors are in the right place. With 0.2° angular resolution, you can guarantee that (with the distances I assumed for the cameras) the laser is within about 1mm of the target.