More reading.... I'm thinking we are looking at this a bit differently.

For normal CNC, I can control the position accurately with Mach3 with limits and such. What the joystick is for is relative movement and is basically freehand. The limits will be in effect for protection, but are not needed for normal positioning. The closed loop with the joystick is the person with his hand on it. On this specific application, the Z axis is actually a separately controlled process. Specifically, when the trigger on the joystick is activated, it starts an operation at the X-Y location that you manually positioned it to. Later additions will inhibit the X-Y movement when this process starts, but for now it just needs to position the head. Think "Helicopter". More stick, more pronounced movement. If you want it to stop, center the stick, pull the trigger, and the magic happens right where you want it. when it is done, move the stick to the new location and do it again. You are only controlling direction and speed.

OK, I hope that adds some clarification.