well exactly. but really its not that people will sit 1ft from a screen, because there is always that depth feel to a big screen. generally people will become move onto larger screens. i recently started using a projector as main source of viewing, tv, sport, games, and movies.
take into account a similar viewing distance of aroudn 2-3m, not sure what that is in ft sorry, i have always sat about this distance from tvs ive had. it works out well for furniture placement in a room, speakers etc, sofas yada yada. but now i find 110" to be normal at this viewing distance, when it wasnt too long ago i had a 37" lcd, then 42", 50", was going for 60-65" and jumped into a day to day projector instead after much debates over best tvs, future of tvs, technologies improving like graphics cards.
i only have a 720p setup at the moment as it was a temporary purchase to see how i would suit using a projector full time, two thumbs up for that purchase !!
but really, after having had 1080p and 720p tvs, i really find the 720p projector has been fine for me. at times i can tell, like with text etc, but in general im more concerned at video bitrates and filming techniques than the resolution. 720p - 1080p, they are both a step up from DVD.
also the first images of this thread, when i started reading it i was sure the bottom was 1080p due to the detail of the leaves and tree branches. just passed it around to some buddies at work and said what looks liek 1080p. all thought bottom. now think that when a movie plays you dont pause it every 5 seconds and review the image for 2 mins. you may at first to confirm your expensive purchase was worth it. but in general viewing terms you wont have enough time to properly analyse the difference.