using arduino to control hydraulic servo controls

How can I build a system using 2 analog proximity switches to control a MOOG Hydraulic Servo valve.
One proximity has to read voltage to move in a positive direction and the other has to read in a negative direction. This has to move 1 axis in a balanced forward and reverse movement. Could I use a range finder? Total of the movement is 3".

How accurate does it need to be?

If it doesn't need to be very accurate, you could find it's position with a single linear potentiometer (you can get ones longer than 3 inches). If it does... use one of the chinese linear scales, like they use in digital calipers. would be a useful article in that case.

within .001 " it is for a screw machine

.001 over 3 inches?

That's a minimum of 12 bits.

The tracer for this follows a guide plate set for an angle or pattern. It has 2 gagging transducers now, they are very old and not reliable. This is used to make a taper on any round bar. This has to operate the same to simplify use. That is why I am trying to use 2 analogue proximity switch or 2 range finders. The voltage that will be used to actuate the MOOG valve has to be -5 VDC to +5VDC to reverse direction.