All digital projectors whether DLP, LCD or DILA are progressive display devices and must have a progressive signal sent to the display panel so any input that the projector is designed to take will be processed to display progressively. The image must also be scaled up to the displays native array so 250I would be converted to a progressive signal and scaled to the projectors native resolution. How well this is done is based on the quality of the projectors internal scaler. Some PJ's need an external scaler, HTPC or PS DVD palyer because the internal scalers are not up to the task of doing it all.
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Regards
GMan