Well...I thought there was a very good discussion regarding SQ and "The SQ Position Encoder", but to perhaps sum up it's use as an encoder I thought I'd supply this explanation.
From Ken Sessions "4CHANNEL STEREO ..From Source To Sound" TAB BOOKS 2nd edition
"
SQ POSITION ENCODER
-----The SQ matrix code (fig 7-12) may be optimized through the use of an SQ Position Encoder.
-----A Position Encoder produces signal pairs LT a d RT so designed as to provide optimum SQ modulations for the side(as well as the front and back) quadrants. Referring to fig 7-13 , the eight pairs of arrows surrounding the vector diagram represent the LT and RT phasers corresponding to "panning" a unity strength signal to the assigned directions . The LF, CF , RF , LB , CB , and RB phasers and the resulting modulation vectors are exactly the same as those obtained with the straight SQ Encoder. However, the CL and CR phasers result in two elliptical motions coaxial with LT and RT . Their projections on the horizontal line are the same length as those for LF, RF , LB , and RB , with the consequent improvement in monophonic compatibility which now extends to the total "horseshoe" Space surrounding the listeners. The center back is allowed to carry incidental and reverberant sounds which (1) are reproduced in phase and with full accuracy in the quadraphonic mode , (2) tend to become antiphase in the stereophonic mode , and (3) are diminished in amplitude or disappear in the monophonic mode . This at times is desirable , because the clarity of monophonic performance is often improved by removal of excessive reverberant sounds . "
sorry but thats the best schematic of the position encoder as provided.