I hear these types of questions all of the time, and in reality there is not a specific answer which applies.
Front projection is best improved by the room it is in. Unlike a flat panel which can work decently, to very well in a room with light in it, a projector can rarely achieve more than a 50:1 contrast ratio in a lit room. A typical boardroom strives for about a 12:1 contrast ratio! With this in mind, the room is the single biggest performance enhancement for any front projection setup.
So, with a mostly dark painted room, and dark ceilings, carpet, furniture, etc. and a decent projector you will get remarkable results which easily rival the local cinema. Even a good cinema can be quickly devastated by the quality of a good home system costing just a few thousand dollars.
Image size? Sure, let's go there...
As image size increases, brightness on the screen decreases. So, it becomes a math equation. The goal for 2D viewing is generally between 13 and 18 lumens per square foot. Typical advertised lumens are about twice what real world lumens ever are after calibration, so, about 30 lumens per advertised square foot... Then do the math to see how much screen you can go with. Even then, if you take a bit of a color hit, you can often go larger, but certainly in a truly dark space, at 13 lumens per square foot, most people will be happy with what they see on screen from a decent projector.
Of course, a decent projector itself has a cost associated with it, and the deep contrast models such as the Epson 5020, or better yet the Sony and JVC LCoS models really do deliver the good stuff which puts them up there with good plasma and LCD displays.
Back to image size, you have to understand that projectors (and sources) are typically running at 1080p. That's 2,000,000 pixels on screen. The same number of pixels in many 50" TVs are what a projector uses. So, as the size increases, the quality gets worse when viewed from the same distance.
That last part matters a great deal, because people often forget that as you move away from a pattern of dots, it becomes more and more difficult to distinguish individual dots. Similar to pointillism in art, as you move farther and farther away, the image is smoothed out to the point where the average human can't resolve the individual pixels. This is just beyond 1.5x the screen width for the average human with 20/20 vision.
At the basic level, a screen that is 10' wide and viewed from 15' away with 15 lumens on screen and a 1,000:1 contrast ratio will appear identical in quality to a 20' wide screen viewed from 30' away which delivers 15 lumens on screen and a 1,000 contrast ratio (all colors, motion, etc. being equal as well). But, take one step closer to the 10' screen, and the image will appear worse than the 20' wide image. Take 5 steps closer to the 20' wide image and it will look worse. Don't put as much light on screen, and things could look downright ugly. Use a poor video processor, and things can be nasty looking, while better image processing, better color rendition, better contrast, and more details in the black with better light output can deliver an image that is much better.
At the end of all this, put a JVC RS46 into a dark room on a 100" fixed frame screen and add some good audio and you will rival 90% of the theaters currently out there.
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- Theater, whole house audio, and technology installation in the Washington DC metro area.