Let's keep things a bit simpler...
Screen size is really subjective, and I see no issue with a 16' wide screen - if your budget allows for it.
On the low end, you want to draw about 12-15 lumens per square foot. The Mits HC1500, which you have can deliver about 1,600 lumens at brightest, but likely is in the 700 or less range when optimized for home theater.
Looking at the Projector Central calculator, and setting the image width to 192" (16') you end up with 5 lumens per square foot on that screen - less than half of the absolute MINIMUM that you should have.
http://www.projectorcentral.com/Mitsubishi-HC1500-projection-calculator-pro.htm
Since you are talking about blackout cloth - which works very well for smaller screens - you are saving a lot on budget, but adding absolutely nothing at all to screen gain. You simply are in the .9 to 1.1 gain range at most with blackout cloth.
I'm not against the idea at all and according to THX you should have your main seating about 1.5x the screen width - so main seating at 24' - which could work in the room.
Yet, for a screen of 144 square feet, you need a projector that can actually deliver a real world 2,100 lumens and is likely rated at closer to 3,000 lumens to hope to get that type of light output over the life of a lamp.
The projectors section has one such projector that was just listed... At around $36,000 it's a steal.
If we seach for 16:9 projectors under $15,000 which can deliver 3,000 or more lumens...
http://www.projectorcentral.com/projectors.cfm?mfg_id=any&res_id=any&ar=2&td=0&is=0&bll=3000&bul=any&cll=any&cul=any&wll=any&wul=any&prll=any&prul=15000&an=0&sp_id=0&dvi=-1&trig=1
We have seven projectors which can do it. Only one of them is 1080p, none of them are DLP, and only one of them is a 'value' projector - a Sony at $2170 street. But, that Sony, as great as the price is, does not have HDMI or any digital input and is 100% designed for business use.
Probably the best one on the list is the still business desinged Mitsubishi...
http://www.projectorcentral.com/Mitsubishi-FL6900U.htm
About $10,000 - and it can hit your screen and light it up like you should expect.
At the end of the day, I would bring the screen size down and recommend that to you. Move your seating closer, and treat the room with acoustics. Make the most of every aspect of the room you have, and keep some storage space in your basement. Unless you are prepared to dish out for the Sim2 CX3 for 36K, then don't ruin the space with sub-standard quality. Also, keep in mind that a room that size might also require a significant investment in new audio gear to actually get the sound to properly fill the space.
Budget accordingly and plan accordingly - but if the budget doesn't meet the plan, then adjust the plan to fit the budget... or raise the budget.