Hi,
I have never had any problems on a metal cutting machine (lower feeds,less chance of tripping up)
using up to 5 times pulse multiplier on a g340 (902 fitted).I would not use 10 times on anything other than a point to point machine.
When you have the modifier in 1x mode it is in effect a g320.
The Idea of the encoder divider circuit sounds fine I did try and make one once but it didnt really work.
The only thing I would say is that it will make the motors noisey on stand still as they will have further to "hunt"
Plus the system will only be accurate to 4 encoder counts,those four counts could under the right circumstances add up or decrease and lead to position inaccuracies.In my case the 3d mold making can take up to 8 hours to machine.
To sum up if your not using very high CV feed speeds,and you cant change your encoder, then the puse multiplyer is great.
I always buy g340's over g320's just to have this benifit,once you are aware of the limitations the "problem" can be worked around.
Tony