I decided to revisit this but model it from scratch. I have a micro servo on order from ebay canada ($2.50), and fortunately it's such a popular servo that someone has created a 3d model of it. This design essentially has a custom target (extruded slot shape with holes on top and a slot feature on the side), there's a cap (this acts as a hard stop so I'm not relying on the accuracy of the servo) which means it will always be flush, and the servo arm rides on this slot on the side to lower and raise. THe target also slides inside a sleeve.
I went ahead and 3d printed a sample, and it feels good. Not too tight, not too loose. Because I have a sleeve, it has really good support. I knocked into the target a few times, feels VERY solid. As for a switch, I can either mount one beneath the playfield just in front of the target, or I can do optos from the side.
Few nice things about servos vs coils:
1. They are CHEAP now
2. They are quiet
3. They are reliable (no sleeves and carbon dust)
4. They don't have to be just up or down, they can be anywhere in-between. What if there was a mode where they rise and fall in a waveform, and you have to time the ball just right to get through the first target