a good source for encoders is US Digital They are very resonable on pricing and also nice folks. I have been buying from them for about 10 years. They have a wide variety, so I am sure they have something you could use. As for cost, keep in mind what it will cost to scratch something together using an old mouse. You could make it work with 48 pulses per rev, but again, it depends on what you want to spend. I would want at least 1 degree per rev, so for that you would need a 7.5 to 1 mechanical gizmo to spin the mouse encoder 7.5 times faster then the antenna. (Lego's come to mind)
The encoders I have used from US digital all have TTL level outputs, directly readable by the PIC. I am not sure if you can expect a clean transmission from the roof to inside the house. If not, you could have a pic at the antenna send RS232 signals to the house, then read them with a puter of build a unit for inside to display the position.
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