The PQ with a projector really is a significant issue. If all my viewing was done on our 37" TV in the living room, this would be less of an issue. I am signed up with Netflix to have discs mailed to me - which requires little to no effort - and it's kind of fun filling up the queue with interesting titles to anticipate. You have to use it and keep the film cycle going to maximize the investment into the monthly fee, but one can hardly argue with the simplicity of the system. We also have a very nice video store in town that has a pretty deep library w/ a wall of Criterion releases, expansive foreign film selection, lots of interesting indie films, documentaries, etc. I cater to them as much as possible. They have a nice deal in which you can rent five discs (excluding new releases) for a week for $6.00, which I take advantage of quite often. I kind of enjoy going to the store, browsing the racks, looking at new releases, etc. - but I realize I am probably in the minority as far as that is concerned.
The limited selection at Redbox is pretty depressing and makes it of little interest to me . I am a bit of a film buff and, although I enjoy many of the mainstream releases and love digging into a good "popcorn flick", I spend more of my time in pursuit of cinema that falls well outside of the small slice of cinema at a Redbox kiosk.
It kind of depresses me to think that a time may come where compressed streaming is the only remaining option.