"So one question is, does Mach3Turn use the spindle index to control the movement of the lathe during threading?"
YES
Yes, it will adjust the Z axis movement, within some range, and try to correct for variations in the spindle speed.
So if the spindle were to slow down during the threading pass as compared to a feed rate it will try and fix it in the next pass. During the threading it will try and slow the axis, but if, out of range too far then the thread is
beyond repair practicaly speaking.
It won't' correct for higher speeds, since that should not be possible if i remember correctly... during the threading.
Now the "trigger" so to speak , going from G94 to G95 is based on seeing a stable rpm. If "green light is given", the axis will ramp in speed and the controlled point should hit the material in sink and based on the gcode.
What is not clear in my memory, is, the basis / control of what exactly happens during the ramping ( lot going on!).
My lathe is simple, no BOB's, no spindle speed control so there are no complexities to deal with. Just a dumb index
saying to Mach, this is the spindle rpm and here is a spot / trigger you can use to start threading. The true spindle rpm ( as measured measured with a independant indicator ) is close to the DRO display over the whole rpm range.
RICH