Another vote for the Epson 1080UB. Amazing projector at a very reasonable price. The Panasonic mentioned above also got great marks and was my #2 projector choice.
On screens, I have a 92" fixed screen from Elite. It cost < 500 delivered and produces a very high-quality image. I thought briefly about painting a screen but it sounded like too much work with a high possibility of error (especially with my skill level).
To the questions above regarding quality... a 1080P image on Blu-Ray is absolutely stunning. The quality looks as good as any LCD or DLP TV I've seen.
