I like how those brackets let you move the motors more outboard and make it slightly less cramped. I experimented with putting the encoder wheels on in both directions and got better results this way according to the signals on the scope.
I have used the LCD pins as input pins for the encoders.
Green -> Ground 2x for the encoders 1x for the USB to TTL interface
Orange -> encoder 1 on each motor
White -> encoder 2 on each motor
It took a bit of experimentation to figure out which pins would work with the different interrupt vectors but using pins (9 and 13) along with (4 and 12) seems to work, and these are all free with the LCD removed.
With the LCD removed, you will need some way to monitor the board. The easiest way is to hook up a serial monitor to pins0 and 1. These are conveniently available and can be brought out the bottom of the board. Attach these to any TTL to USB converter (CP2102 or FTDI) and you can use the serial monitor. See the image below, note you also need to tie the ground on you USB to TTL module to the ground on the board.
Here is a quick implementation using the Pololu Wheel encoder library ported from AVR c to the Arduino Environment. NOTE you will need to have a serial monitor hooked up to make this work.
PololuWheelEncoders encoders; //instantiate an encoder object
int i = 0;
int temp1 = 0;
int temp2 = 0;
// Initialize the encoders and specify the four input pins.
// Read the counts for motor 1
temp1 = encoders.getCountsM1();
// Read the counts for motor 2
temp2 = encoders.getCountsM2();
Next is to wrap up some primitives for motor control. Maybe make a nicer cable.