The 8350 would be my first recommendation as I've used it several times in entry level home theater setups. It produces a very bright image and performs well. Still, I own a Panasonic (my second one) and it has performed very well and they remain a top shelf company. Since that projector is a bit brighter, I see no reason not to use it unless you are going to complain about it not performing flawlessly when the lights are off... Remember, your budget is entry level with this and there will be performance tradeoffs in a non-ideal room!
A screen from
HTDepot.com offers best projector screen value for home theater is a solid choice. It is one of many 'cheap' Chinese imported screens, but I've used it and if you carefully follow (as best you can) the installation instructions you will have a decent screen with a good black border on it.
Fixed screens are ALWAYS the best way to go when possible and money is tight.
Remember - no audio with projectors, so you will need to provide that separately.
Also, you will need a good ceiling mount, the Chief RPMA-U is by far the best on the market right now that I know of. Pricey, but actually worth it.
Projector: $1,200ish
Epson 8350 Projector (Epson HC8350) Epson Home Cinema 8350 Projector From VisualApex.com
Screen: $400.00
Focupix 16:9 Widescreen Fixed Frame Projector Screen - 125" White
You REALLY want at least a 120" diagonal image size!!!
Mount: $160.00
NEW Chief Speed-Connect RPMAU Projector Ceiling Mount w | eBay
Cables:
HDMI Cable, Home Theater Accessories, HDMI Products, Cables, Adapters, Video/Audio Switch, Networking, USB, Firewire, Printer Toner, and more!
Total: Under $1,900!
NOTE: Get your lighting properly controlled in the space and make sure you do it right. People always, always, always blow the lighting and it significantly impacts the quality of the projected image for a stupid lack of forethought and planning.
If this is a multipurpose space, then at least 3 zones of lights minimum, and up to 5 or 6 zones is fine. Can lights over seating (zone 1), can lights over the pool table area (zone 2) can lights for the rest of the space (zone 3). This will allow you to turn lights on in certain areas which are not near the screen and will not significantly impact the image on screen.
Examples:
AV Integrated - Custom Audio Visual Integration In Washington DC Metropolitan Area
Don't forget to paint the room dark and to use dark carpet and, if possible, dark furniture.