You're exactly right on the digital readouts. They are cheap on the 2D. I know the readouts are not accurate down to repeatable .0005" because when i would start the machine and zero the readout, after cutting a few keys if I come back to "zero" it read either .001" or -.001".
If one wanted to dump a bunch of cash into the machine i am sure you could mod some starrett or mitutoyo DRO's and get close to the stated accuracy but who wants to do that

.
For the best book out there on high security locks and their operation, take a look at amazon.com for High-Security Mechanical Locks An Encyclopedic Reference. Written by our very own site member Greyman! A true 5 Star read!!