Hi,
The QEI module in the 18F4431 is great. It can be set to decode in 2x or 4x mode so your 400 cycles per revolution encoder will give a count of either 800 or 1600. I don't see that as a problem even if you're running the motor in full step mode. More resolution is almost never a bad thing :-) In theory it should allow you to measure how much the shaft is actually lagging the commanded position and allow you to slow down when the lag start aproaching 2 full steps. Because the instant the lag equals 2 fullsteps the rotor desynchronizes and position is lost.

/Henrik.