I have been wrestling with the very same question, researching, auditioning, reading, thinking, comparing, imagining, laughing, crying... Here's what I have concluded:
Projector Pros: You can make the screen size anything you want it to be. It weighs just a few pounds so you can move it around to your heart's content (unless you mount it to the ceiling). If you go DLT, you get a great picture that doesn't require periodic convergence. You can improve the picture with HTPC (expensive right now). 16:9 ("widescreen") is possible with a panamorph lens (expensive right now). "HDTV ready" is not an issue -- it's just a projector, it is ready for anything you throw at it. Plus it can double as a projector for business presentations.
Projector Cons: Has fan noise, about like a slide projector (whoops, I'm showing my age). Depending on the brand, fair to gawd awful in the user-friendly department. A decent number of brands to choose from, but not like RPTV. Needs tweaking -- not for someone who has no patience for reading a manual. Must have a fairly dark room to get best performance. Some people see annoying rainbowing. If you buy it locally it will be expensive but you might (depending on the dealer) get setup and service. If you buy it on the Internet you will save money but get no local help.
RPTV Pros: Plug and play. Silent operation. Many brands and sizes within brands to choose from. Easily auditioned. Locally available, local service. Lots of them out there so you can get very good deals. Status symbol.
RPTV Cons: Huge footprint. One heavy mother. Fixed screen size. Requires periodic convergence. If you choose a 16:9 screen, you're warned that if you watch more than 50% of the time in 4:3 you'll burn in the screen. If you choose a 4:3 screen, you'll never be able to watch movies in widescreen.
I'm sure I've forgotten some issues in the above categories and look forward to any comments.
My conclusion: RPTV is a good choice for a family with lots of kids that is looking for a big screen TV for the rec room. Or for people who don't want to bother with all the foolishness of settings and computer nonsense. But for someone who has the luxury of a dedicated home theatre and is willing to do some moderate tweaking, a projector is the only way to go.
When was the last time you went to the movies and watched a big TV?
Despite the few negatives of a projector, fan noise being the most annoying for me (supposedly a "hush box" can help this), I have concluded that it is the best choice for me. In my opinion, RPTV today is what console TVs were in the 1960s.
I chose the NEC LT150 projector. Current street price is $2343.