(sorry gene) - A good place to get a lot of good basic information on projectors along with a LOT of terminology is at
www.projectorcentral.com Keep asking questions here as RLA and others have excellent information that can help you out.
There are many considerations for any front projection setup, including the size of the room - or more accurately, how far your seats are from the screen.
THX standards put primary seating about about 1.5x the screen width. This means that if you are sitting about 12 feet or so from the screen, then you want about a 96" wide screen - call it a 106" diagonal to go a bit under. That is 'normal' and is really where you want things to be. Will it be 'HUGE'? Yes, but this is also why you go to movie theaters and is what you want. It won't be overpowering though - it will be very similar to the effect you get by sitting right in the middle seats of the movie theater.
Now... 1080p vs. 720p...
It's a very good question and right now, my opinion is that if you are on any sort of budget, then 720p is the way to go right now. There are many 720p projectors on the market (1280x720 native resolution) and many of them are absolutely awesome. They are superior in quality to $15,000 projectors from just a few years back. So, projectors like the Sanyo PLV-Z4, Panasonic AE900U, the Optoma HD72, or the InFocus IN76 can all be had for under $3,000 (some about $1,700 or less).
How is the image? Absolutely awesome! Really - it is almost undescribably how incredible those projectors work in a dark room. Key word is DARK - you don't go into a theater and have them leave the lights on, you can't do it at home either if you want the best results, though minor lighting or recessed lighting in your ceiling can be done very well for low level light.
1080p? That's the next generation. IMO, it will be a couple of years before it starts to hit its stride and prices and performance is not quite where I believe it should be. I think in 2-3 years we will see 1080p projectors under $5,000 with all the capabilities of todays 720p projectors and then some. Blu-ray and/or HD-DVD will be a couple of years old and better understood and the projectors will then be 100% compatible.
I love the Sony - I think that for the money, if you have that money, it is one of the best buys out there right now. But, it lacks the competition it really needs and will be seeing later this year from several new 1080p DLP projectors coming out. Yet, even then, competition will be light and it will be more or less first generation products.
As far as filling your screen (
www.carada.com) - Typically you will fill your screen entirely. You MUST put your projector where the projector allows it to go for a particular screen size. Like if you have a photographic camera with a zoom lens. If you are want to take a photo of your friend and you want to get him from head to toe - you do not want ANYTHING under his feet or ANYTHING above the top of his head. So, you stand 3 feet from your friend, but you can't do it - either his head is cut off or his feet are cut off. So, you back up... At 7 feet you are far enough back so that you can do it - any closer and you start cutting off his head/feet. You keep backing up... At 11 feet you find you can't take a picture of your friend without getting some stuff either above his head or below his feeet. So, you get a bit closer. At 10 feet you find that is as far back as you can be to capture your friend from head to toe with no extra stuff above or below.
The zoom range, for a person the height of your friend, is from 7 to 10 feet away. If your friend were taller, you would have to move back a bit. If your friend were shorter, you would need to move up a bit. If you switch to a different camera, you have to start ALL OVER AGAIN to find out what range works for the new camera. Maybe it allows the same picture to be taken from 6 to 12 feet. Or from 9 to 18 feet. Or from 11 to 12 feet. Don't know until you test it - or READ THE OWNERS MANUAL.
This is similar to how it works for projectors. They have a lens and can zoom in or out on the screen. Some can zoom in and out more than others. Some can be closer, others further away. But, every projector tends to be a bit different. For a 100" screen size, a very typical distance from the screen for the projector is about 12 feet. But, it depends on EVERY PROJECTOR!
How do you find out where you can put your projector?
http://www.projectorcentral.com/Sanyo-PLV-Z4-projection-calculator-pro.htm
Then select a projector model - I have the Sanyo Z4 already selected in the link.
Read lots of reviews, and do a fair bit of planning. Audioholics has some great reviews here:
http://www.audioholics.com/productreviews/avhardware/index.php
Sanyo Z4
http://www.audioholics.com/productreviews/avhardware/index.php
Panasonic AE900U
http://www.audioholics.com/productreviews/avhardware/PanasonicPTAE900UProjectorReview1.php
Optoma HD72
http://www.audioholics.com/productreviews/avhardware/OptomaHD72p1.php
InFocus IN76
http://www.audioholics.com/productreviews/avhardware/InFocusIN76DLPprojector.php
Sony VPL-HS51A (also worth considering)
http://www.audioholics.com/productreviews/avhardware/SonyCinezaVPLHS51Ap1.php
KEEP IN MIND LAMP REPLACEMENT COSTS!