I would definitely consider that outboard component switcher. There are even models at Wal-Mart for about 20 bucks that can switch component video for you and do a good job at it.
You always want to try to use the best connection you possibly can. Cable in HD if possible over component or HDMI/DVI. X-Box over component. DVD over component. Heck, I think I only have one or two devices anymore that aren't component.
You can't send anything better than 480i resolution over composite or s-video, and even with 480i, component may still give you a bit better quality in the long run - so use it!
If running wires to the projector is difficult make sure you run, at the very least, composite, component, and HDMI wiring.