the other thought I had was making the PIC do calibration to improve accuracy over the long runs... some form of look up table of offsets per cm
Certainly do-able. Of course, it does require a calibration standard of must higher accuracy than the scales (thinks: I have a magnescale strapped to the side of my lathe that's good to a few microns over its entire length).

Though frankly, for the RF30 type mill I'm using them on, they're probably good enough as they are.

what about compensation for temperature? does the PCB expand enough to warrant it
If, as you suggest the pcb is a set of disconnected copper fingers then I guess it is compliant enough to flex with the SS carrier.

I am debating whether to grind the calipery bits off or try to use them as a mount..
They cut easily with a friction saw but watch the temperature,as you don't want the glue to come undone. I drilled mounting holes with a carbide pcb drill.

Were you thinking of making a stand-alone display device or using a PC?