The rainbow effect is basically a flutter of colored light that exists on DLP based projectors, especially in darker scenes. It is most apparent in the 2-3x speed DLP wheels. I've heard that when you get into the more expensive DLP's with faster wheels, it may not be a problem.

If you place both of your hands in front of your face about 8-10 inches, with your fingers spread apart, and then move your hands side to side real fast crossing each other, that is what it looks like.
M80s-VP180-QS8s-EP600-2xEP350 Denon3808 Outlaw7700
(M22-OWM22-VP100)-all in storage