I can help you with the electronics, since I developed a low cost 4-20mA interface recently. It translates a voltage, derived from the pos indicator, into a self powered current loop, which can transport data over several KMs without any problem, to an also recently designed receiver, which translates the data into a readout, or almost any voltage you want, up to 10V.
The position sensor is obtainable off the shelf I think, if not, I can design one, based upon your application information.