When I give projector advice, I usually try to make it a bit simpler by telling them to compare three things about the projector--these three things are the ones that will mainly tell you about the quality of the image:
1. Lumens (how bright the projector is). As others have stated, if you have a good ability to control the light in your room, then you can probably get away with a lower lumen output projector. Most home theater pjs have a lumen output around 1000 lumens (on paper), although you will see that after calibration, the measured lumen output is typically much less than this. If you have some ambient light, you might want to get a pj with a higher lumen rating. I just picked up the Mits HC1500, and one of the main considerations for me was the lumen rating, because I will have some ambient light present sometimes.
2. Resolution: Nowadays, most home theater projectors have 16x9 panels (much like current LCDs or plasmas)--i.e., they project a widescreen image. There are, generally, two levels of projectors now: 720p (which is 1280x720) but can also be 1280x768) and 1080p (which is 1920x1080). You can get a good 720p projector for $800-1300. The 1080p projectors start about 1300 and climb from there. I was content with 720p, which is why I went with the Mits HC1500.
3. Contrast ratio: The contrast ration gives you a general idea of how deep the blacks can get on the projector. The higher the number, the more contrast between the light scenes and the dark scenes. Typically you will find contrast ratios anywhere between 1000:1 up to 10,000:1. The Mits HC1500 is 2500:1, and I understand that it has pretty good, but not great, black levels.
(OK, one more):
4. I threw in a final consideration. At the price levels you are talking about, there are two types of display technology you need to consider: DLP panels or LCD panels. Both types project an image using pixels, but both do it in different ways (do a search for an explanation of the difference). In many cases, the preference for one or the other is entirely personal. I have only owned DLP projectors, so I decided to stick with what I know and picked the Mits HC1500 over similarly priced LCD projectors. DLP has a drawback for those that are susceptible to the rainbow effect (having to do with the colorwheel that is used inside the projector). But while I have seen rainbows in the past on my previous projectors, my brain must have compensated, because I do not see them anymore. And the Mits HC1500's colorwheel is twice as fast and have many more color segments in the color wheel, decreasing the rainbow effect even more. For a discussion on the rainbow effect, do a search.
