My Tree CNC lathe had encoders on the ballscrews rather than the motor, with a toothed belt between them. I replaced the brushed DC motors with LiChaun AC servos (ie encoders within the motor) and Centroid Acorn. Works fine.

I don't see any big distinction between the 2 arrangements. You still have some backlash between the ballscrew and the table / toolpost and within the slides themselves.

The next step beyond encoders on the ballscrews or motors) would be closed loop control using linear encoders (usually glass or magnetic scales). Centroid have just released the "Hickory" and "Acornsix" controllers which build on the Acorn system by catering for encoder position feedback. That might be an option if your finances permit.
https://shopcentroidcnc.com/hickory-cnc-controller/
https://shopcentroidcnc.com/acornsix-cnc-controller/

The main difference seems to be that the Hickory uses ethercat - Acornsix is probably more appropriate for the likes of us.