Is there any significant difference between the couple of photointerrupters and a reflective?
Radial encoders of high resolution can have a wide range of linear codes depending resolution, speed and thus frequency response of the optical system.  Both reflective and transmissive methods work well.

HP>Agilent> Avago> has pioneered high resolution optical encoders in both methods. Since the geometry of circular area detectors  and radial lines has a distortion or crosstalk between dark and light, there are good reasons to standardize on the smallest wheel size to support a wide range of resolutions from 100 to 2000 pulses per revolution.  This standard optical radius is called the Rop.  At one time a 1" diameter was standard or Rop of 0.5"  newer reflective glass and metallized wheels from Avago use 11mm.


  Their smallest solution uses precision reflective optical technology
  with a 1mm gap on an 11mm radius wheel. The size and cost reduction of
  the optics is the significant difference, while maintaining the same
  resolution.


Of course you try to make your own smaller diameter wheel, but at the cost of lines per mm , LPmm and then compromise in radial to linear error which results in lower signal to noise and higher detection error rate with dust. The limitation is determined by spot size of emitter &amp; detector areas.

CPR = LPmm x 2π x ROP , 
Where CPR = Counts Per Revolution