If you are serious about this then it becomes a question of 'how serious are you'? Front projection can be done on a budget and the Optoma HD66 is a very good 720p projector (1280x720 resolution). It is a proper 16:9 aspect ratio, and will deliver a good image on screen in a dark room. As is always the case, you can't have lights on, and light walls will hurt the image, but it is still a decent entry level home theater specific projector with good ratings and reviews.
It can be had for about $500 which is a fair and honest price for a projector.
The caveats with this: You don't get to put a projector wherever the heck you want. It has a limited range zoom lens and with a 110" diagonal, you MUST put the lens of the projector between 12'5" and 13'7" from the screen. It also should be 6" above the screen on a ceiling mount, or 6" below the screen on a low table.
That measurement is VERY specific and exclusive to that projector, but that's the one I would recommend at a very entry level price point.
Now, there are dozens of home theater projectors out there, but true 1080p front projection from a reputable company starts at about $900 right now. It has the same limitations on placement flexibility, but will provide a great experience.
Let's be clear on this - Home theater can pretty easily rival the movie going experience. You can get 'center of theater' feel with a 120"+ screen and a decent sound system which is properly calibrated for your space can often times blow away the actual movie theaters, which is great, but does take a bit of cash to do it all up nicely. Still, it is the first step that matters.
What I would do if I were you and had a $1,000 firm budget.
1. Get the Optoma HD66 ($500)
2. Get a cheap ceiling mount which is adjustable (important to have height adjustment!) - ($45) -
Projector Ceiling Mount - NPL Series manufactured and sold by MountDirect.com. 100% all steel design, with roll,pitch and yaw adjustments. Work with Suspended ceiling, drop ceiling, or false ceiling with optional Suspended ceiling adapter
3. Get a long HDMI cable for your BD player and a long extension cord... Preferably spend some time wiring it in properly, but this isn't a requirement to begin with. - $75 -
For only $50.18 each when QTY 50+ purchased - 40ft Ultra Slim Series High Performance HDMI® Cable w/ RedMere® Technology
4. Get a cheap (the cheapest!) manual roll up screen (if you must). ($150) -
Focupix 16:9 Widescreen Professional Pull Down Projector Screen w/SlowMotion - 110"
5. If you CAN do a fixed frame screen, it is FAR better... ($290) -
Focupix 16:9 Widescreen Fixed Frame Projector Screen - 115" White
6. Get a inexpensive home theater setup, even a home theater in a box kit with the money left. ($200ish)
Now, there are a million other things you can do to improve the experience, and if you like it and get into it, you may crave a great deal of what that experience has to offer. 1080p video playback, dark walls, ceiling, carpet, better (far better!) sound, great lighting, and good theater seats are just a few of the things that people put into their theater to really make it incredible.
But, at the root is a good sized, decent quality screen and a decent projector with some reasonable sound. It is hard to impress upon you how important good sound is to a quality home theater, but at the very least, decent sound is a good starting point.
There are some good primers for front projection setup at
www.projectorcentral.com - But, ask your questions here as I hate answering in multiple places.