Blu ray on my projector and vga vs displayview connectors

hey guys I have this projector http://www.projectorcentral.com/Sanyo-PLC-XF10NZL.htm and I hooked it up to my PC and I am currently running it in clone mode at a 1600x1200 res and wondered how this is possible when the specs on projector central say the max is 1280x1024 for the projector?

I want to know because I am going to get blu ray for the projector and wanted to know if the quality will by far surpass SD DvDs.

Also on my projector I have a VGA (analog - which I am currently using) and displayview (digital) hookup and was wondering if I should stick with VGA or does displayview offer a much improved quality (especially since I want to use bluray at a 1600x1200 res)?

Thanks a ton in advance guys!!!