Mach3 doesn't take MPG input from USB RnRMotion board. While running Mach3 "Manage plugins">"RnRMtion control panel. I can see the signals from the hand controller changing, Mach3 diagnostics show not

Yes, you can connect a THC, Torch Height Controller, with the Mach3 USB controller. The THC uses the inputs to determine if the z axis needs to move up or down according to the arc of the plasma torch. The THC connects its outputs to the inputs of the controller so the controller will be informed of the states of the plasma torch.