Servos really aren't the ideal shape for making a robotic joint, as was recently discussed in another thread. You really want something with a through-shaft, like the Tamiya Worm Gear Box HE. But then you have the problem of providing an absolute position encoder, without doubling the cost of the joint.
I had an idea last night for how to do this using a quadrature encoder plus one additional optical sensor. No, it's not a reference notch, but it's similar: it tells you whether you are ahead of or behind the neutral position. That way, when your robot starts up, it can safely move all its joints to the neutral position. From that point on, you can use the quadrature encoder for position control. And those things are available both tiny and cheap these days (in the $1 range).
Read more about it here:
Please let me know what you think.
Best,
- Joe