What for you is a compelling reason to go with a projector instead of a plasma/lcd/oled television? Picture quality is not one of them.
Going with a projector can get you into a larger screen size at a given price point. I got a HD projector (720p/1080i) and 92" screen for for less than $1500.
I am happy with the picture quality. The tradeoffs? No, it is not as sharp/crisp/bright as a smaller plasma, and the picture is definitely washed out when there is a lot of sunlight in the room. However, I really enjoy the larger size for watching sports and movies, and at night when it is dark outside the picture looks very nice. I have not gotten around to installing light blocking curtains, which would make it look better in the daytime. Since stejampzy is putting this in his basement, I assume he will have good control over ambient light which is a plus for a projector-based display.