Geez...this is totally typical of me. I'm trying to reinvent the wheel. Steering wheel that is...

you were right, the mouse optic didn't like the Atari encoder wheel.
Found this page:
http://www.zumbrovalley.net/readpost.php?artid=1Loads of words there....but ultimately let me to:
http://www.zumbrovalley.net/ArcadeOptics/trackball/ 
AMAZINGLY easy to simply hack into where the existing IR Optic stuff is and jump it to a Happ/Tatio/Atari Optic stuff. There's really just 4 wires, input, +5v, Ground, input.
Once I knew that it was just a matter of figuring out if the little Atari board was wired the same as a Happ board. Turns out...it is! Same Pins doing the same thing. Input, +5, G, Input.
Anyway. Once it was done, I could tell right away that the data it was getting was MUCH smoother than what I had before rigged up with the Mouse optics looking at the Atari encoder wheel. The mouse moved across the screen SOOO smoothly. Really exited, I fired up MAME -roadblst -mouse.
OMG!!!! I don't want to say the game was "easy"..but compared to what I had been dealing with...I felt like I was cheating!!!
Now I gotta find where the mouse buttons are and wire them in. Then figure out if there's a cheaper way than an a-pac to interface a POT (the pedal is a potentiometer)....I'm thinking maybe the scroll wheel will work from the mouse. Seems that that's a possibility....but not sure yet. Anyway, hopefully this post will help some other stooge who likes making things too hard on themselves.
woo hoo!
