sounds like maybe one of the ways jvc managed to put out such an amazing value with the x35 is by skimping a bit of the upconversion processing?
it's been ages since I've watched a dvd, but just the other week my buddy(who is also a teacher) asked if I wanted to go through the harry potter movies since his class was reading the books and he wanted to preview the movies. we're both on vacation, so what the heck. well we watched the first few at his house cause I was painting my theatre room. I noticed how bad they looked on his old plasma but thought nothing of it. then we watched one at my place, and it still looked really bad, like a 700mb video rip almost. very compressed. turns out they were dvd's, not bd's like he thought (long story). so anyway, those were the only dvd's I've watched on the x35, they did look really bad, but really bad compared to how fantastic 720p and 1080p stuff looks.
I've watch SD cable and it looks pretty good to me. but, I also have my pioneer 1018 receiver set to upconvert to 1080p, so the projector isn't really doing any of that.
before I went too hard on the jvc, i'd try another source that can handle the upconversion. also while your at it, buy a damn BD player
they're like 50bux, and they still play dvd's so it's not like you need to replace your collection, just stop buying new dvd's.
i'd also say there's a bit of personal preference to understand when reading reviews. what somebody sees as 'clean' somebody else sees as 'digital and fake'. I happen to love the smooth, film like look with the jvc. others might take it as not being as sharp or having a 'grainy' image.
either way, the solution/problem seems to be the processing turning a 480p source into a 1080p image. best bet from here is to find a device that does a good job at it so the jvc doesn't have to.