Ah, ball mills; so 120 RPM might well be far too high. I once made a lapidary mill, around 100mm diameter, and the rotational speed was quite low, probably about 50RPM. If you go for a larger drum then the speed gets progressively less since you want the product to roll within the drum rather than hug the wall. Out there on the internet you'll find a suitable equation for optimum speed versus drum size. An example of which is given here http://www.pauloabbe.com/productLines/millingEquipment/principlesofgrinding.html
If magnetic sensors might be a potential problem you could always go for a reflective optical system. They use a twin sensor head (transmitter + receiver) and pieces of reflective tape on the drum. You can have as many pieces as you can fit to increase resolution.