If someone had the know-how to code a new/modified dos mouse driver, one option for far better tracking would be to increase the baud rate past the 1200bps normally used by mice. Even 9600 or 19200 would make a gigantic difference. 57600 might be too high for the oldest systems to handle. Of course, I'm not certain how the other programs would handle that.

A few Atmel chips also have USB HOST capability and there are existing code samples and stacks for reading data from a usb mouse, so a USB mouse to RS232 PC adapter _might_ be possible.