I'm sort of in the same boat as the original poster. I used the HD-DVD player (HD-D1) with an Optoma H31 projector. In my case I had to upgrade the DVD player's firmware to 2.0. and use it with 720p where it looks excellent.
Also, and it's something that almost nobody has mentioned, the HD-DVD player makes an incredible 480p player. Compared to my Panasonic 5-disc progressive scan player, it puts out a much nicer image -- better blacks and colors, and the deinterlacer is WAY better. I'm currently using component.
The key for me was upgrading to firmware 2.0 (mine came with 1.3 which is the first of 3 numbers when you check what firmware you have) and using 720p. 1080i was poor on mine due to my projector's poor job of scaling 1080i not because of the HD-DVD player. I believe the 4805 does a better job of scaling 1080i than the H31 does (my X1 does too).