This one is perhaps a toughie, and I wouldn't rush into anything until you're sure, and that includes PJ hunting. I'll start with the easy method, then throw out a couple of random ideas.
1) My first instinct is a 65" plasma where the windows are.
compromise:
This means you don't get to open up the windows unless you're ok with neighbors knowing you have a big tv.
advantages: less money (waaay less), don't have to worry nearly as much about light control as with a PJ, no one knows you have the stuff unless you invite them in, keep larger space for better acoustics.
2) tab tensioned retractable AT screen that falls over three inwall speakers on the opposite wall.
compromise: finding the best way to hide the entire mechanism without invoking an ungainly look.
advantages: painting the speaker grilles with the same color red gives you a bit of stealth. Retracting the entire screen means no one sees it when they walk in, more stealth. (The screen will likely need extra "drop" to get it to the correct height, while allowing a possibly very high and completely hidden roller mechanism). I recommend Seymour, but you will want at least 11' distance to be safe (though I would be fine with closer, this is to be safe).
http://www.seymourav.com/screensretractable.asp
3) the partitioning of a dedicated room as you're already thinking about (I only bring this up to provide my own opinions/insight).
compromises: already covered, I believe. You lose space, and even more space with walls, greater expenses, poorer acoustics. I don't think anything says luxury more than space does.
advantages: No one knows you have it, as you stated already. You would have absolute freedom in the aesthetics of a dedicated theater. However, I tend to vote for performance over aesthetics. I thought I should reiterate this advantage, as the look can be fantastic (but again I'm nearly certain this is not the path I would take . . .) Check out this 12x13 room on a tiny budget, looks great:
Small Budget, Smaller Room HT Conversion
