Thanks to all for comments and suggestions. I overcame my shyness yesterday and took it apart to see for myself. It looks easy, now.
There are three elements to the original system. The moving channel, with magnetic strip A milled aluminium base, normally concealed behind the gauge. And the plastic box housing the encoder and gauge display.
The solution looks like, swap out the magnetic strip on the existing channel for an M-DRO item. Retain the aluminium base, as it is machined to contain the channel anyway. And simply replace the electronics case with an aluminium block, providing location and fixing for the encoder, and held by the same six small screws holding the plastic case at present. Simples.
Which also leaves the potential, if I need it, to add a z-axis encoder, connected by a summing adaptor. And is reversible too.
Wish me luck, I'll be calling the Allendale chaps next week. And, again, many thanks for those insights.
Cheers, Colin