Yeah, 1200 counts per second really isn't THAT much. How to go about it depends - as always - on what else the PIC is supposed to do while keeping count (ie should it output to the AD9833 and if so, how, while counting pulses or how it's supposed to work) and on what peripherals and interrups sources are available.

If counting is one state and outputting is another then a tight loop polling the inputs will most likely do just fine for 1200 transistions per second.

It's important to determine if the 60 counts are with 4x decoding or not and if that is needed or not. Not doing 4x decoding is a lot easier than doing it.

The 18F2431 family contains a QEI module that will happily keep track of an encoder producing counts up in the MHz