I do have a fundamental questions
In theory, how does a $1000 1080i proj differ from a $1000 720p projector when using 1080p blu ray player.? I know there must be some variables, but I'm curious if there is a huge clarity difference.
First off, there are no 1080i digital projectors. By their nature, digital display devices, such as plasmas, lcd displays, and digital projectors (LCD, DLP, LCoS) are all progressive scan displays.
So, their native resolution is the resolution they show and it is a PROGRESSIVE display.
So, if you see a 1920x1080 display, then it is 1080p native resolution.
If you see a 1280x720 display, then it is 720p native resoltuion.
You currently own a 800x600 display - which is SVGA, and is progressive native as well.
There is a difference between 720p and 1080p projectors, and it amounts to about a 100% increase in resolution. This adds dimensionality to your projection experience, and allows you to sit at THX recommended viewing distances without seeing visible pixel structure. Is it a HUGE difference? No, I would not call the difference between 720p and 1080p the most important thing... It is not as important as contrast ratio, color accuracy, and image processing. But, a good 1080p display fed a good 1080p source, such as Blu-ray, will show a solid improvement vs. a good 720p display.