Now that I have a 51" x 120" 2.35 screen, I'll never go back to a large TV. Having your own Theater is pretty cool. And yes, the picture can be as good or better in my opinion. HD is jaw dropping and most think it rivals plasmas that visit my place.
You need to understand there are many differant types of projectors, technologies, resolutions, etc... just as there are regular tv's. In addition, there are good DVD players and bad ones, and 720p/1080i upconverting players. I have a Panny S97S HDMI player that can scale to 720p/1080i over HDMI/DVI cables. This mated with my Z2, which has a native 720 resolution makes DVD's look almost HD like. A lot depends on the equipment your using.
http://www.projectorcentral.com is the place I started years ago, it has great articles explaing the various technologies and how they compare to today's regular projection/DLP/LCD tv sets.
One thing that is nice, is that if I do have any warranty issues, it is a lot easier to send in a 10lb unit for 3day turnaround, than to get some huge tv repaired.
Star Wars Episode II taken with my crappy 5 yr old digital camera and no tripod, 51" x 120" 2.35 ratio cinemascope screen.
