I think I found a better datasheet for this sensor.
johnwasser was pretty spot on about the specs.
It looks like the recommended current to the IR LED 15mA. From the graphs, it looks like the forward voltage is pretty close to 1.2V (this varies with temperature and the current passing through the LED.
I bet a 220 ohm current limiting resistors would be fine but I calculate (5V - 1.2V) / 0.015A = 253 ohm which is closer to 270 ohm. As I said, I don't think 220 ohm would be a problem for the sensor but 270 is closer to the recommended value.
This is a really interesting sensor.
It appears to have most of the advantages of quadrature encoders but it should be a bit easier to read than quadrature encoders.
The low pulses are pretty much all the same duration. You could calculate speed but timing a full encoder period of two low pulses and two high pulses. The two low pulses of an encoder cycle should both have about the same duration. The two high pulses will likely have different durations.
The slots in your encoder disk should be at least 0.457mm wide with the total encoder cycle (slot plus non-slotted area) should be at least 0.914mm.
I couldn't find these on ebay. They cost more than $10 at Mouser in single units. I'd be curious to try these sensors but I don't think I'd want to spend more than $3 on one.
If any of you know of an inexpensive source for these sensors, I hope you let us know.