Infocus says the 4805 is HDCP compliant, but you're the second person I've seen this week having this problem. Other is an X2 (4805 clone?) over in the FP forum. Both with Onkyos, but different players. To me, it sounds like either the player or 606 doesn't believe the 4805 is HDCP compliant and thus the downscaling.
You do realize the 4805 is only a 480p projector, correct? While it will accept 720p and1080i signals, it will have to downscale them to 480p. You should experiement with letting the A2 downscale HD-DVD instead of the 4805. For SD-DVD, 480p out should be better for the 4805...if you upscale in the A2, the 480 will turn around and downscale...you've just interpolated and then deinterpolated the image, better to just leave it alone IMO.