Be sure to have the projector shown to you and used for both native 480i picture and 108i/p. Be sure that the projector gives you the images you are happy with. A 1000 dollar projector is mighty cheap for 1080p. Also check out what dvd's look like in 480p with a normal dvd player. stores love showing people stuff on a HD feed or blu ray player then when they get home are like WTF! Also with a projector you'll need less light, most cases a complete dark room with minimal light. The TV is a bit more user friendly for everyday purposes.
The squirrel said most of it. I just wanted to reinforce that for a decent pic with the projector, it will need to be completely dark. Even blinds over the window don't really cut it during the day unless they block out the light completely. Also think about upkeep. Projectors will need bulbs replaced periodically and a lot of them cost 3 figures.
Both of these fellows have made excellent points about projector setups. There is a store in my city that sells home theater packages (like, dedicated-room home theaters), and I've done a lot of shopping there and elsewhere putting together equipment I would like. I was looking at $1500 for a good(not great) quality 720p projector, and $1000 for a base-level retractable 96" screen. Then you have to add audio to that... For what it sounds like you're looking for, I'd go for the TV bro. Projectors aren't quite as portable as you might be thinking - they're not just plug-and-play. Any time you move it dramatically it'll require new setup for distance, zoom, angle, light conditions, etc...
the ideal tv viewing distance is a 1:3 ratio (so says they, who they are i do not know) i.e. 42" is ideally viewed from 10 1/2 feet. The whole 1080 thing is not that big of a deal at that size either in my opinion, maybe if you sit two feet away you will notice the pixels on a 720. Watch the amount of inputs on those tvs on sale too, I have seen good deals and then find out that there are not enough inputs for all my video feeds.
I purchased several a while back and just went with what looked best to my eye. What I ended up being drawn to was the Sony LCD's - just the 720 seemed fine to me. I made the mistake of hanging a 42" inch one on the bedroom wall.....I now go to bed at 7.
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