potentiometer instead of rotary encoder

Use a 4060, perhaps.

Oh .. didn't thought about that .. how do you think I should wire it ..any suggestions?

Why not try the following:

* take a 10k pot

* use analogRead on the Arduino to read the value

* divide the measured value by 6 (1024 / 170), giving you your pulse value

Something like that ?

int potentiometer_pin = A0;
int potentiometer_value = 0;
int pulse_value = 0;

void setup() {
}

void loop() {
  potentiometer_value = analogRead(potentiometer_pin);
  pulse_value = potentiometer_value / 6;
  
  delay(10);
}

Perhaps take a look at this tutorial:

https://www.arduino.cc/en/Tutorial/AnalogInOutSerial

Connect the potentiometer wiper to the analogue input and then use the map() function to scale the range from  0-1023 down to 0-170

You can then use code to check whether the current input value from the pot is greater or less than the previous measured value and generate your pulses.

that's pretty much it but only thing that i don't see in that sketch is that I need to pulse two differrent pins -one if I'm increasing and one if I'm decreasing

Great .. but I'm total noob so I don't know how to check the current value ..

Ok, go here and watch tutorials 1 to 4:

Jeremy Blum Arduino Tutorials

and you will no longer be a 'total noob' 

Tutorial 4 shows you how to check the current analogue value and do something with it, but it sounds like you will be better of starting at the beginning.

Some more advanced and in my opinion detailed tutorials here Fast Track to Arduino Programming  detailing how to deal with the analog reading and other fun stuff. I am over due updating it but it is more up-to-date than Jeremy's but perhaps a bit more complex too.

As far as using a rotary encoder, a simple limit trap in you code would easily deal with that

as an example

if value > MAXlimit, value = limit

if value <MINLimit value = MINLimit

There is nothing wrong with using a rotary encoder and there easy to use with the available libraries

My problem with rotary encoder is that I wanna make a pedal that for it's range of motion can develop 170(or150, or 190) pulses so if I'm about to use encoder with 24 clicks pre rev then it's obvious that it'd take more thank one revolution..so really- I need potentiometer that thru program makes pulses

Why do you think rotary encoder can't handle your requirement? There are encoders with more than 10 000 pulses / rev. For your application encoder with 500 pulses / rev would suffice.