The dials on all the "medium-end" digital cameras I've owned always worked reliably despite many years of regular use, as do mouse scroll wheels, so I gather you're correct about cheap components.
Come to think of it, the scroll wheel on my Logitech G502 — three-way clickable, switchable between free-scrolling and traditional mode — would work well in sort of handheld hardware scrolling device, and an electromagnetic scroll wheel of the sort used on some newer Logitech mice would work even better, as it could be configured in a free-scrolling mode with variable friction.
