The article you site is talking about mid-span rotor bow not allowable tolerances at bearing journals and/or probe target areas. Having said that excessive rotor bow will also likely evidence itself at the journals as excessive journal runout.
The removal of mechanical runout is simply handled by proper tolerancing and the selection of the machine process, i. e., a lathe can't do as good a job as a journal grinder. As far as electrical runout degaussing is the first step but often doesn't get the rotor in spec.
In a proximity probe the magnitude of current supplied and the depth of the eddy current flow into the shaft are a function of the conductivity and permeability of the target material. Inclusions, cracks and carbon segrations cause discontinuities in the eddy current flow, which changes the eddy current response. Keep in mind that whenever there is a change in the electrical properties of the material there is likely a change in the mechanical properties as well. This is often seen as a change in hardness around the periphery of the journal. Inclusions below the surface of the steel may be too deep or localized to easily identify by mechanical means. A point to make here is the eddy probe "sees" below the surface, depending on the material about 300 to 380 µm (12 to 15 mils) in depth. When a shaft is diamond burnished the surface is cold worked and becomes significantly more uniform in surface hardness. This adds significant compressive stress to the outer skin of the shaft that can be seen by the eddy current magnetic field. BN has long stated "...is not fully understood why this reduces runout, but the fact that burnishing generally reduces runout implies that stress variations in the surface of the rotor have a significant impact on electrical runout." The diamond burnishing tool doesn't really remove material. Burnishing is a relatively inexpensive process as it can be done in a lathe. The tool is run into the surface and is loaded against the surface to about 60 kg (125#) by a compressed spring in the tool. It is rotated at low speed in the presence of significant lubricant and results in a mirror finish. Burnishing after grinding will reduce runout by about 60% to 80% but those numbers are highly dependent on the type of steel. High carbon steel (AISI 4140 or 4340) responds nicely while something like 9310 (very high in mangenese) has minimal response to the burnishing tool.
Go to http://www.ge-mcs.com/download...05/3q2005_runout.pdf
for an Orbit article (Vol. 25, No. 3, 2005, pp. 5-17) titled "Understanding and Mitigating Shaft Runout” by N. Littrell. It will provide some good insight into mechanical and electrical runout and their reduction. I'd attach it here but it is likely too large.