I think you'd notice quite a bit of quality improvement even with a new 720p projector. I might be wrong but isn't the infocus X1, SVGA? 800X600 resolution? If so, that's about half the resolution of 720p and native 16:9 just feels more movie like to me and doesn't squish 2.35:1 ratio movies quite as much.
I used to have a NEC MT1045 projector, it's 4:3, 720p native. It didn't have hdmi. I just connected sources to it with component cable and used toslink for audio, I couldn't get the highdef loseless sound formats but at least I could get DD5.1 and DTS. I upgraded recently to optoma gt750 projector. Most projectors from the late 90's early 2000's can't come close to new ones, tech has gotten much better/cheaper. The NEC MT1045 came out in 99' and at the time it had a MSRP of 12,000.00 (I got mine from a college computer recycling center for 25.00). But my newer 750 dollar projector is much better.