Building a GOOD screen with a proper black (velvet) border takes a lot of work, but certainly is an option. Just painting your wall is fine as well. It all depends on the quality you are hoping to achieve from the final product. I think the border adds a TON of punch to the image, so that's something I certainly would recommend. I would not do it with just a 'white canvas' screen without any trim.
You should also build a screen that is appropriate for the room. Not sure your viewing distance, but plan for at a minimum of 10" of diagonal for each foot of viewing distance.
You spend a lot of time talking about what you want to do, but not about the room it is going into, what your seating distance is, what the lighting situation in the room is, what color the walls are, or much else. These are some of the most important factors when deciding on both a projector and a screen.
As for a projector, don't buy a piece of crap. The cheap Chinese imports are throw-away technology with warranty support that is typically next to non-existent and image quality which is acceptable, but a LONG way from what proper LCD or DLP projection looks like. Single panel LCD projection SUCKS. Period.
If you are looking for a value oriented projector, then check out the refurb stores for Epson and BenQ. Epson offers the better warranty, but BenQ will have a better projector at the entry level.
Epson is running a bit thin at this time, but keep an eye on their site as new 1080p refurbs come and go on the regular...
Epson Home Theater Projectors have up to 3x Brighter Colors than leading 1-chip DLP projectors
epson.com
The HT1070a, refurbished, is $300. It will KILL any entry level Epson and will decimate Vankyo or other cheap Chinese import crap.
Shop for BenQ certified refurbished HT1070A, a home cinema projector with 3D wireless FHD.
www.benq.com
BenQ offers other models with better features as well on the outlet site.
Features you often need, but don't know you need: Decent zoom range, proper lens offset, perhaps lens shift (adds $$$), more resolution ($$$), etc.
So, you need to know what your final setup will look like well before you start buying and building things.
But, yes, 10" of diagonal MINIMUM for each foot of viewing distance. Often 11 or 12 inches of diagonal for some.
I sit 15' from a 162" diagonal image.