You may want to consider an LCD projector. I personally have used the Sony VPL-VW12Ht with Da-Lite's High-contrast DA-MAT screen in several theaters and have been very impressed with it's performance. It has 1000 ANSI lumens and a contrast ratio of 1000:1. It doesn't have the eye fatigue problems of single panel DLP's either. At about $6K, it's a lot of bang for your buck.
I have been demo-ing an NEC HT-1000 here at work for the past few weeks. I am a design engineer for an A/V contractor. We do mostly commercial installations but the projector was ordered for a friend of one of the owners. I have been evaluating display technologies of every type since I started here (3) years ago. The HT-1000 is the best image for DVD I have yet witnessed. At around 5.5k it's priced very well.
Murray, NEC makes incredible 'business class' projectors, and they provide excellant warranties to back them up. i too have heard very good things about the HT-1000. i've also owned a LT-150 for almost a year and a half now. i'd pit it against a $17K Runco anyday, especially if i had a $1K HTPC...right now all i use is a $250 dvd player.
everytime i'm within distance, i'll stop in a HT store and check out their projector set-ups. i've seen the Sharp, Marantz, Runco, and a Yamaha that was pretty nice. they all seem like good units, and are certainly a lot quieter than mine, but for sheer picture quality, i don't see a whole lot of difference between those $7,000-17000 set-ups and what i enjoy at home. noise from the pj is the biggest annoyance followed by what is either the internal scaling of the pj or, quite commonly, the limitations/poor quality of the software.
if you can get a discount on the above NEC- i'd seriously look into that.
In all honesty, I would recommend getting a Used CRT Projector. There are several individuals on the avsforum.com who refurbish projectors, such as Curt Palme. They offer continued service once the projector is purchased etc.
CRT Will give you much better contrast and a better image, with absolutely no screen door or rainbow effects.
The image may be dimmer, but it is more theater film like.
In addition, tubes generall last over 10,000 in a CRT Projector, while bulbs in a projector generally last 2,000.
Not trying to take you away from digital, however, I previously have had a DLP and LCD projectors, and now have a CRT Projector, and will never go back.