[thoughtful]

Goto Mr.Kevin's FAQ
http://kevin.org/frc/encoder_faq.html

As it mentions that the optical output should be quadrature, i am very new to encoders;however, i think that as long as the output is quadrature you will be able to hook it up with the rc with some tweaking. I was looking around for some hollow shaft encoders, but didnt find one to my liking. If anyone knows a hollow shaft encoder or finds one please do post.

Edit:- Make sure you get a resolution that will suite you.