While we're on the subject and hopefully as a basis for discussion with folks in the know ( Urebel? )...
Due to a Windows / MAME oddity... MAME does not properly implement the Z-axis from what I can surmise. It does work well, but the sensitivity command is out of scale. This means that for best results the sensitivity must be set at 1 to 2% when using the Z-axis.
There are a bunch of technical reasons for this, but the Opti-Wiz is not the problem. Windows uses a WHEEL_DELTA system for reporting wheel events. Instead of reporting a single "tick" when a mouse wheel (Z-Axis) event occurs, it reports 120 "ticks" (the arbitrarily set value by Microsoft for future expandability), whereas the X and Y axes report only 1. If I'm not completely off base, MAME should be checking to see what the WHEEL_DELTA value is when using the Z-Axis and divide the values being sent by this value and then perform the sensitivity adjustments on the integer result. It does not appear to be doing this.
Hopefully someone can insert this code and submit it to the dev team to get the Z-Axis supported properly.
Heh, I was going to post a question on this Z axis "resolution" issue yesterday, but never found the info to backup my "facts" before I timed out and lost my post.

Good thing though, since I was wrong by a factor of ten (more on this later) and Randy addressed it without me looking like I was against the Opti-wiz.

IMO, the "best" fix would be a special "fine Z-axis" mouse driver. Most drivers multiple the scroll number by 120; IE: one detent tick on the scroll wheel is sent as a single tick over USB which the driver multiples by 120 to work with windows WHEEL_DELTA like Randy said.
However the future is already here; there are a few drivers that don't multiple by 120.
MS IntelliPoint for the tilt wheels look to multiple by 30 (don't own one, but I know I like a no detents feel*). One of my two scroll ball mice can set the multiplier to 10, 20, or 30 in it's installed driver; can't remember OTTOMH which one:
targus's dual mode mouse, or that compaq scroll ball mouse sometimes on sale for $4. (This 10-30 multiplier was what I yesterday thought was the standard multiplier instead of the correct 120.)
The only difference between the normal mouse driver and the special fine Z axis driver would be that the driver doesn't multiple by 120; it would be really cool to have it variable from 1 to 120. But I don't know how to write drivers, soo....
[edit] I don't know USB's info descriptor (<-- is that the right name?), but can you set the Z axis wheel_delta on this? I doubt it, but thought I'd toss it out there.
Until then, mame could divide the Z axis by 120 (or 30 for IntelliPoint mice, or whatever).
Minuses:
- the possibility of backspin might raise it's ugly head (data is being pasted 7 bits (120, or 111 1000) bigger then it needs to be),
- IntelliPoint mice (and other future mice) would have "finer resolution" than Opti-wiz (not physically, but software wise).
Pluses
- Any mouse could be hacked,
- no driver changes needed,
- might be more compatible with windows scrolling (see below)
[shrug]
But the Z is still absolutely usable as a spinner (plus it's cool to use the spinner as a scroll wheel for those long list boxes
)
How well does it scroll in windows? If it's well scaled, that's one reason the changes should be in mame, not the in the driver (noted as the last plus in why to change mame).
*Aside, I don't like the hard detents on most mice now a days. I had a "4d scroll mouse" a looong time ago with two smooth scroll wheels, but it's not made any more.

And the only reason I sometimes use the two scroll ball mice I have is for the no detent feel; they aren't the highest quality mice. (I originally
bought the scroll balls for mame testing.) Hopefully MS gets copied and more manufactures make smooth scrolls. Looks like MS is also adding the horizontal scroll to the OS Vista, 7 years after I got the 4d scroll mouse with horizontal scroll.