The PS3 is annoying in that it doesn't support RGBHV/VGA output.
With only the component and HDMI you're kind of stuck with most CRT projectors which need RGB. Sony D50/G70/G90 projectors can take the component signal just fine without a transcoder.
All the hype about the PS3 and Blu-ray is 1080p, which you cant get across the component output - only the HDMI. So even if you get a projector that can deal with the component signal or a transcoder you'll be running 720p or 1080i.
To get 1080p you need a digital input. A couple people on the form (Moome and JohnHWman) have produced DVI/HDMI input cards for Sony and NEC projectors. I've ordered Moome's but don't have it yet and am on the waiting list for Johns. I've seen posts from people reporting the moome card to work with the PS3 but I'm not sure if they were running it at 1080p.
If you do go the component/transcoder/projector route it would still probably look great (or as good as the PS3 can; but lets not start that kind of thread
. If you go the custom DVI/HDMI input card route it would be best (but they cost more than $100).
Another really sad thing to keep in mind is that the PS3 does not scale the video output. So if you have a projector that can do 1080i but not quite resolve 720p and you want to play "Resistance: Fall of Man" (or many of the launch titles) - it doesnt support 1080i and the game will be forced to run in 480p. In my mind this actually does make a good argument for using a CRT with the PS3 since the CRT can be setup to make the best of all the resolutions it can display. If your projector can run 1080p/720p/1080i properly, the games will look better running at their native resolutions than a digital set that has to scale them once they get into the display.
I thought the 480p component restriction on Blu-ray disks was only for ones that actually had the copy protection enabled (which I dont think any of the currently shipping disks do). So for the time being I would expect them to play at 720p/1080i via component. The sony site isnt really clear:
Video output in HD requires cables and an HD-compatible display, both sold separately. Copy-protected Blu-ray video discs can only output at 1080p using an HDMI cable connected to a device that is compatible with the HDCP standard. HDMI cable not included. Additional equipment may be required to use the HDMI connector.
We do have a retail ps3 at work hooked up with component cables. I'll check if someone can bring in a Blu-ray disk and see what it does...