It is a Hines HC-500 balancer. You program in the parameters like: radius, bearing to bearing, and stantion width and just spin it. The computer tells you the add/remove amount and the position to do so.
You are correct, the shaft with the magnetic attachment is an encoder for position and rpm. This machine is calibrated to give correct correction readings at 500 rpm. That said, you can spin it as fast as you want, but the correction reading would be wrong. I have spun computer disk drying hubs at 2200 rpm.
Yea, in a nutshell, I am using the crank as a "real time" mandrel to correct the rest of the parts.
In fact, the "mandrel" I have for balancing Mopar torque converters is a 383 crank that is balanced to a real simple bob weight setup. I fine tune it to zero with clay, bolt up the converter with a balanced flex plate, true the runout, install the stator centering tool and spin it.
What are you balancing at such a high speed? Turbo impellers?