This is an interesting situation that I really think is location specific.
I would rarely, if ever, recommend a front projection system for someone's living room or main floor "TV". I just feel that they're almost too massive and possibly obtrusive to integrate into everyday living spaces for most people.
Now, if this is for a basement and this is going to be the main display in a large area or if you are going to have a "day" set up with a flat panel & a "night" set up with a recessed drop-down screen, then I say go for it! We do that all the time for our clients. Modest flat panel up stairs & a killer FP set up downstairs (or combine them both for the Day/Night option). The trick, though, is to find something to use with the lights on.
You stated an under $5K budget w/ 1080P.
I just demo'd and was very much wow'd by the BenQ W5000. I feel that DLP offers a much much better picture over LCD projectors. The BENQ's street price is around $3K - $2500 and I've seen it online for around $2200ish (not authorized). This is replacing the Mitsubishi 4900 as my company's entry level projector. It left a very strong impression on me and I feel it's value is incredible, particularly when put up against the LCD pieces occupying the same market space.
Now, your screen is going to be the tricky part! In the open basement or rec area scenario I referenced above we usually go with a product called X-Screen from Planar. It works well in areas where there's natural sunlight (no direct sunlight shining on screen, though) and EXTREMELY well in areas where there's canned lighting or lamp light. I love the X-Screen for a huge basement theatre or area where you might want to sit down and watch TV on a huge screen. Biggest problem with it: Narrow viewing "cone". You really can't get way off to the side of X-Screen. It's a great solution if you're sitting in front of the screen and not way off to the side. The sizes range from 60", 70", 80" & 100". The 70" (MSRP: $1700) or 80" ($2K) would be the way to go for you if this were an option based on your needs. Esthetically the screen looks like a big plasma frame. Gloss black frame (like a flat panel) with a thin layer of silvery/gray coating on the actual screen part. While $2K sounds lke a lot for a screen you have to remember that it DOES a lot and designed for special applications that your typical mat white screen can't function in.
http://www.planarhometheater.com/xscreen/
Asuming you get the projector @ $2500 (which is typical) and the 80" screen @ $2K (there's margin enough so that you can bargain for a better deal). You'll come in under your $4500.
I don't know if it would fit your needs or not, but there's what i would do on your budget if i wanted FP in an area that may or may not have the lights on.
A TV option to really consider is the LG 60PC1D. It's a 720P/1080i 60" plasma. I used to own one (I switch my gear out almost weekly) and think it's an excelent value. I actually kept this for about 6 months because I liked it so much and had nothing compelling me to change it out. I really loved it! I'm an LG dealer and after owning this and intalling/selling the other LG 60" 1080P models I think that hands down this 720P/1080i piece is the way to go. I just failed to see any real world discernable difference between the different 1080i & P pieces when viewed at proper seating distances. The 60PC1D peformed incredibly well with HD DVD, DirecTV HD, and over the air HD. The nephews brough their Xbox 360 over and played games on it and that too was really impressive. Standard def programs were very good as well and standard def DVD was excellent.
Under NO circumstances would I buy the Olivia TV.
