Yeah, I had the same thoughts you are having. The technology question was answered rather easy. DLP was too expensive 2 years ago (for me). I bought the Sanyo PLV Z4, which was a pretty well tested and especially quiet (important!) HD ready LCD projector, but still affordable to me. Also neither me nor my girlfriend really spent much time on watching TV, so the projector was there for DVD mostly. That said.. I'm still using my first light bulb although I've unnecessarily bought
a second bulb a little while ago.
I set it up in my living room, projecting onto a wall I had intentionally left blank ;) opposite to my sofa. I already had a surround sound system set up, so all I really was missing, was a large screen. I'm not using any other screen than the wall paper, which is a minor set back in quality, but it allows to have a huge projection (2,50m wide) which I don't want to miss. I've tried to use a good but smaller screen, the theater feeling just wouldn't arise.
The playstation 3 hit the German market two days before my birthday this year. That was an omen – I had to get one. ;)
So nowadays I enjoy the good up-scaler of the PS3 to watch DVDs and from time to time I spend the money to afford a Blu-ray disk, which look awesome but are incredibly expensive. Also I enjoy playing Motorstorm
and stream music from my server onto the PS3.
After all I must conclude. I couldn't imagine using a tv for watching movies anymore, no matter how large. The huge projection really is an experience not to be traded in for anything.
A friend of mine, btw., bought a Panasonic DLP projector a few weeks ago. I haven't seen it yet, but supposedly it's really good. From what I've heard, the rainbow effect is only noticeable to a few people, so you should check that out for yourself. Today I'd favor DLP for the better contrast. The LCD's projection of black is actually rather grey and annoying from time to time if you watch a movie with a lot of dark sequences in it.
I wouldn't use a projector to watch lots of TV or to use it multiple ours per day for whatever, but other than that I'd say, GET ONE! :) If you're interested I could find out more about the Panasonic model my friend got, that's probably a good one to consider.