encoder module and inductive sensors

Can the encoder module count the pulses from an inductive proximity sensor mounted near the teeth of a steel drive sprocket? Then use this data for closed loop speed control? What would be a good sensor model to use and how would it be wired to the module? Note that some proximity switches have build in transistors.

This is a clever suggestion and it may work considering the following issues:
<P style="MARGIN: 0px">- There would need to be two sensors in order to create the quadrature. This is required in order to sense direction. The encoder module will not work if only one square wave is received.
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<P style="MARGIN: 0px">- Output level must be &gt;2.5V for high &lt;2.5V for low. This should not be a problem.
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<P style="MARGIN: 0px">- Finally, for sensing speed, the pulses frequency must be relatively high. Speed is sensed by counting the number of pulses received (4 per tooth) during a time base period. Time base is adjustable but cannot be slower than every 16ms. To measure the full speed range (1 to 127) the pulse frequency must be around 8kHz at full motor speed. This will be difficult to obtain unless there are many teeth on the gear and/or the gear spins very fast.
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<P style="MARGIN: 0px">This technique will work flawlessly to capture travelled distance, however.