The encoder fits

almost nicely. BUT, the footprint is for a different type ;-) Good enough for a prototype.

What you can't see: there's an ATtiny85 on the bottom side that will do the decoding. The firmware will support "step / direction" output or send status changes via serial. The push-button can be used to switch between various modes.

If I can figure out how to program this thing without having a 2.00mm ISP connector, I might have a half-pleasant weekend ahead of me. Lots of code-recycling should speed things up a lot.