Sounds like a good idea, my machine came standard with an imperial SPI brand dial indicator. It seemed to function Ok, however I liked the idea of upgrading to a japanese or other quality made indicator and also purchased a Mitutoyo a few years ago. I chose the wrong metric model, and it unfortunately didn't have quite enough travel. I sold it on Ebay, and never got around to trying again. I then took the encoder route, and laid the idea to rest. I noticed at the time you could get digital "dial" gauges in the same physical format, but they were very $$$$. Digital may have flickered too much anyways.
Look forward to hearing about your cutting experiences.
P.s. - don't tighten the two allen head grub screws holding the dial excessively, can affect the movement!
RC