Nice work - I like your lateral thinking with the new pot. A drop-in replacement like this (even if mechanically, but not electrically) for the average pot could turn a desire into reality for many people.

Extending what Mike said, have you tried mounting the magnets on a non-ferrous material, in the same way? Sure you'd need either glue or some kind of non-ferrous strap to hold them in place - but the linearity and sensitivity should be good.