Pete
Most big dial long travel inicators are graduated in .001, and most are accurate to that. We have a multitude of them in our shop, the cheap ones seem to work as well as the expensive ones. By cheap, I mean the ones that a big supplyer like Bass Tool will sell for $15, and toss in a free mag base with the deal.
We don't use digitol indicators, they are too subseptable to a "less than pristine" enviroment, (which our shop is). Plus, in most of our work, it is good to see a needle move, rather than a bunch of numbers flash by. But then we don't use digitol anything, except for the digitol read-outs that came on several of our new lathes.
From what I understand, as far as accuracy goes, there is no difference in a $50 mechanicle dial and a $50 digitol. ............jackie