Hi Lindsay,
Just to clear things up to begin with, quadrature
refers to the relationship between the A and B encoder
signals. The best way to think of the Z output, is an
output that pulses once every revolution. Although it's
pulse will have a specific timed relation to the A&B
quadrature, it is irrelevant for most applications.
Quadrature signals can be single ended aka single
wire, or differential aka twin wire. The key difference
with differential is, as one wire goes high, the other
goes low.
You can often use a single wire from a differential
signal/pair to power a single ended receiver, however it
can be more susceptible to noise. If noise is a concern,
then you can use a differential receiver like the MC3486
to minimise any noise problems.
Now we've covered that, the Z output can be connected
to any suitable input. In terms of using it to home, all
you need is for it to switch an input, as all the homing
routine does is rotate the servo slowly until the input
switches.
If you wanted to share a differential input, you
could do something like add a DPDT relay to switch
between differential pairs. Given the voltages/currents
involved, you could probably get away with some of the
DIP size relays, or small reed relays.
Moray