Why would you upconvert to 1080i, to feed into a projector that has only 720 lines of resolution? Surely doing an up-convert/downconvert would degrade image quality worse than just letting the projector do the conversion itself?
I personally am waiting until 1080 projectors become affordable - I already have a "1/4HD" projector (576 lines), I don't see any reason to mess around with the "interim" 720-HD, and then having to upgrade yet again to 1080.
Now, I am ready to be corrected if their is some magic going on that I don't know about. For example, in the HD camcorder world, the claim is that camcorders with three 720 line image sensors can put out true 1080 recordings, using all sorts of esoteric technology. I really have my doubts that there would be any perceptible benefit by putting out 1080 rather than 720, but then again, I'm no expert...