This particular projector, even with the Cygnus Imaging depixalization filter would not hold up very well compared to a DLP projector, as the pixels will still be seen. However, the current lot of Cygnus imaging image processors combined with a VGA (640 X 480) projector can yeild very good results. I used a Dukane VGA projector with a Cygnus imaging processor and it looked great. However, you're talking about the cost of the projector, plus another $500 if your lucky enough to find a used Cygnus imaging processor that fits the lens of your projector, or about $800 for a new one. If I was going to add on the price of the Cygnus Imaging processor, I might just look for a good deal on an XGA resolution projector.
Having said that. If the screen you're going to use isn't to big, and you're not too close to the screen, you can use a VGA projector and see whether the pixels are noticeable. Some people are not that bothered by them, or are satisfied with very slightly defocusing the projector to take out the pixel structure -- it's at least worth trying before spending the extra money.