There are certainly many factors involved in this analysis. The surface has been scratched on a few of them in the thread above. Regardless of available space or budget, it seems to me that at the heart of a Home Theater/Entertainment center is the final product or what is displayed (and heard - but that almost deserves another thread on its own) to the viewer.
As the number of seperate and possibly unmatched components used to attain the desired effect increases the chance that they will work seemlessly is reduced. It also requires a lot more work and the analysis of a ton more individual pieces by the consummer to get it just right. So there are hidden costs.
There aren't many places to go and view many combinations of projectors and screens and input signals and wires and resolutions to help the buyer make their decision. It is much easier to find single components to view like Plasma, LCD, DLP, etc. units.
The one clear advantage (not considering cost) to the projector solution is the large home theater. A place where you may entertain 5-10 peeps at a time. A good quality projector/screen combination will allow large scale, very high resolution images to be viewed by that many folks. Other display solutions cannot compete without introducing orders of magnitude in cost (mostly cost of manufacturing such a footprint).
From my simple analysis it looks like the type of projector that would be needed to rival plasma visual quality (not considering sound at all) would start in the $5,000.00 range. <A HREF="http://www.projectorcentral.com/recommended-home-theater-projectors.htm" target="_new">See This</A>
Have a look. You may be willing to go with lower stats on the projector. However, from all that I have read (here) it seem that to compete with Plasma quality in displays up about 50" diagonal you would have to spend a lot more for the projected solution. However, if an 8' (96") display is your goal then the plasma is way too expensive at least from what I can tell so far.
cheers!!