How's this for being contrary? There may not be "The One true way", but there are ways that are decidedly better than others.
ME IS NOT the paint you want to use with an X1.
The X1 ....... ( get an X2, it's better! More connectibility, more lumens, better CR, and your Bud doesnt have one!!!
) .......already has a excellent CR value (2000:1). CMRA created ME to augment an LCD PJ with only a 500:1 CR. using ME with decidedly dull your image, dingy up your whites, and cut back on your "on screen" lumens.
You need a highly reflective surface, but since your going with a VGA PJ (800x600) and pumping up the image size to 120" diagonal (96" x 72') your going to want a surface that dpesn't exaggerate the pixelation (SDE) you'll see at that size if your anywhere closer than 12' to the wall. This in mind, you'll want to use a paint that allows for some degree of light penetration to help absorb the grid lines.
Your PJ will have to be mounted at least 18.5' feet back from the screen for you to be at the bottom end of the x1's focal length. (best picture)
Dry wall? No problem as lond as your wall is plumb and level across the surface. Just go get and use a 12" Blade to float (smooth or feather) the tape (mudded) area of the joint out as far as possible. To get a truly even looking surface, float a skim across the whole area and then wet sand to a smooth texture.
If you use Fiberglas Tape and don't layer the mud on too thick, you should never have a "crack".
As far as the screen paint goes, you'd be best served by using a pure white, Flat latex paint. MississippiMud mix mixed with just the barest touch of Lamp Black* would be the ideal choice, layered on with a 1/2" nap roller until it's at least 3 coats thick, the last two coats being wet sanded, then a 4 th coat applied with a 1'4" nap Imitation Lambs Wool roller.
Or just use Behr Ultra Pure White Ceiling (Flat latex) by itself w/ the amount of Lamp Black added to make it match the gray shade of a very light Gray color card.
There ARE some more exotic ideas you COULD try, but I'd suggest that for now, go with the quick, easy solution. Just getting a smooth substrate, and then laying down excellent coats each time should be all the focus of this, your initial endeavor.
The pic below is meant to be a example of a finished X1 / UPW only screen combo, intended for you to easily see a finished result.