DoN. Nichols writes:

Have you *tried* the experiment, or are you working purely from
your own understanding of the underlying optics laws?

Both. As an optical engineer, I approach this problem all the time in
many different forms.

Photons travel in straight lines. The childish gee-whiz notion about a
laser is that its photons are also traveling in *parallel* from a nearly
point source, because that is the casual impression when you wave the
spot from a pointer around. The beam divergence is less than the
angular resolution of your eye, so the beam *looks* perfect. That is
the essence of the mistake that a laser is some magic mojo for this
goniometry.

While laser light looks well-collimated compared to ordinary sources,
and indeed looks indistinguishably like a perfect source to the naked
eye, in reality it is not collimated to the kind of angular precision
required for resolving 0.001" spindle travel on a radius of 12 inches on
a mill-drill, or 17 seconds of arc, which is to say 0.08 milliradians.
Compare this precision to a typical far-field beam divergence of about a
milliradian for the best laboratory lasers, and you see why this hasn't
a chance of working.

In fact, using a laser has nothing to do with this purported optical
alignment gimmick. One could just as well use a flashlight with a
pinhole, or just an alignment scope viewing ambient light. The laser is
just a red herring. Which is what makes this laser-solves-all attitude
even sillier.

And -- if the pinhole is mounted rigidly to the front of the
laser, you are selecting the same portion of the blob as the laser and
pinhole move as a unit.

Your pinhole notion is just wrong from the start. Study the basic laser
principles like beam divergence and diffraction limits. Stopping a beam
makes it diverge more, not less.

When you perfect your 0.08 mrad beam, please call me. We'll be rich.