I'm sure you all are going to shoot me for this suggestion, but it has really worked well for me and it's also HDTV ready for under $1,000. I purchased a Dell 2200MP projector:

The Dell™ 2200MP Projector features DLP™ (Digital Light Processing) DDR technology and a high 1700:1 (full on / full off) contrast ratio for vivid images. The projector’s built-in advanced motion adaptive hardware de-interlacing allows for superior picture quality. Preset and user defined video modes give you superb graphic and video settings. Supporting native SVGA (800x600) resolution, the projector provides incredible connectivity, with support for S-Video, Composite Video (RCA), Component Video and HDTV inputs. With only 37 dBA of sound output, it delivers extremely quiet operation. The projector includes a remote control and a hard shell carrying case, and is backed by a limited warranty2 with Advanced Exchange Service1 available for 1 year.

I am using this projector with a DirecTV HDTV with Tivo receiver (Hughes) and get an amazing picture.

The screen that I purchased is a Da-Lite Model-B with Controlled Screen Return (CSR) for about $250. and have installed it as a ceiling mount screen (100" screen) with a High-Contract Matte White finish.

I was amazed with the quality of the picture of this projector.