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The 7I85 has built in 120 Ohm termination when used is RS-422 (line driver) mode.
no additional termination is needed.

1. Should be OK, just get a good quality one like MeanWell or Delta
2. TTL encoders should work as is with 7i85, so should glass scales rated at 5V, incremental types that is, and both differential and single ended also work on most Mesa cards.