I think I may have found what I need in VOLUMOUSE.
I tested it on my laptop and it can do exactly what I want.
Wish I had found this when I built the system. As it it I now have to search at work for an old mouse to use. I saw someone use the encoder from the powermate in place of the mouse encoder. I hope I can do that because the powermates encoder is already integrated into the display bezel.
Another plus might be that a mouse is usually discovered correctly in XP. The powermate sometimes isn't.
Still, if anyone knows if it can be done with the powermate I'd still appreciate it.