Combine signals from two rotary incremental encoders to one output
What you're going to have to do is decode both of them into step and direction bits, combine those, and then regenerate the quadrature outputs.  

The first part can be done with a couple of flip flops and a couple of xor gates.  See http://www.fpga4fun.com/QuadratureDecoder.html .  Then you OR the step bits together and use a mux to select which direction bit to use.  Finally, use a simple state machine to generate a quadrature output from the step and direction signals.