Hi,
  I have built a pendant for my mill with an encoder. it all works fine.
Is it possible to put two encoder's/handwheels on so that it is more natural to use manually?

Yes, I have two encoders mounted in a box. When using the lathe they are for the X & Z axis and when using the mill they are assigned to the X & Y axis. They are not calibrated for movement, rather, the settings are such that the faster or slower i turn the wheel the faster the axis moves. So slowly turning the wheel i can just creep up on the piece in .0001" movements. But like all things, that is how i use them and wouldn't do without
them.
Some folks have actualy mounted them in the lathe carriage, so it mimics a manual lathe and is very natural to use them.
RICH