I see many two axis installations, omitting a scale on the headstock quill or the tailstock quill. The first digital readout that I added was on the headstock of my RF30 clone and when I got my G0602 lathe, one of my first additions was a DRO on the tailstock quill. The tailstock quill has a graduated ring but it is .06" inches/rev. Actually .0591"/rev. When boring to a precise depth, it was necessary to do the math. Even worse was the RF30 clone. The fine feed was .085"/rev. and if needed to drill, mill, or bore to depth, it required counting revolutions and multiplying by .085 and calculating the partial rev. required. Additionally, if I wanted to do a rapid return, of the quill, I would lose my position.
For the relatively small increase in cost from a two axis DRO to a 3 axis, I would never hesitate to go with three.