You're correct that the documentation could be friendlier. Even the little sketch on the side of the 2nd module is not super clear.
The two Outputs on a 1734-VHSCx are fast (25us ON, 150 us OFF) 24V solid state sourcing outputs. They derive their power from the Field Power Bus of the POINT I/O assembly to their left, and the output can drive a load of up to 0.5A. They have open-circuit and short-circuit detection diagnostics.
The two "RET" terminals on the second module are connected to the DC Common of the field power bus. An output load can be connected between Output 0 or Output 1 and either RET, and it will be energized by +24V when the Output comes on. They are basically just another place to land wires you want to connect to the DC Common of the Field Power Bus.
The Vaux terminals are not connected to the POINT I/O field power bus: they give you a location to provide power for the encoder and terminate the encoder's power wire. The two VAux+ and the two VAux- terminals are just connected together internally.
That is handy for encoders that take 5, 9, 12, or 15 volt power instead of 24.
You can drive a small relay with the output of the VHSCx if you wish; that will give you more power capability but of course less speed.