Saw an old Jensen code cutter on eBay the other day. It was touched on by an old thread here: http://www.lockpicking101.com/viewtopic.php?f=42&t=58218&hilit=Jensen+dial&start=30.
It looks like like someone retro-fitted a small Unimat lathe by putting the cutting wheel on an arbor, installing a key vise on the carriage, and then installing dial indicators for space and depth.
Got me thinking, what if the concept were modernized to use a 3.5" x 8" Sherline lathe with an X & Y DRO (digital read out). Using a DRO would have to be easier than using dials or dial indicators. When I used metal lathes in the past, having a DRO made everything easier. The stock tool holder could be rotated 90 degrees to hold a key, although a dedicated key vise to go on the carriage using the tool post T-bolts would be better.
Would not likely replace a dedicated code cutter, but for a hobbiest (who would like to have a lathe anyway) it could work well. A Sherline with a factory DRO has a list price of $900. That is about half the cost of a Blitz or Framon, plus it comes with a lathe. TIag is another American made mini-lathe, although there are not off-the-shelf DRO's for it that I am aware of. A bare-bones TIag would run $400ish and there are plans out there for retrofitting them with digital calipers for home-made DROs.
I'd have to save up money for a while for one of these lathes to give it a try. Has anyone ever tried something like this before?