How do you plan to mount the projector? Does it need to be at a certain distance?
What is your viewing distance?
What screen size were you hoping for?
I would always suggest the Epson 8350 as an excellent first projector for everyone, and I certainly would NOT recommend a cheap bottom of the line business class projector like the 705 for anyone.
There are still only a few 1080p projectors under $1,000...
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I would probably still stick with the Optoma HD20.
Keep in mind replacement lamps, for manufacturer branded versions, are about $300 per lamp and should be budgted for replacement at 1,000 hours. If your wife thinks $1,000 for a 100"+ display is 'expensive' then you may have headaches with $300 maintenance costs.
I would not sell the plasma yet, but save up a couple hundred more for the Epson 8350.
Epson Projectors: Epson PowerLite Home Cinema 8350 3 LCD projector
Keep your eye out for specials as that projector can sometimes be found for under $1,000.