I say go FPTV all the way....if you have some decent light control going on.
Before I got my first projector, i was using a Pioneer Elite 53" 16x9 HDTV. Awesome picture. The first projector I got was the ae100. The PQ was not as good as the Elite (it is good though) but the fact that my image was 4 times the size, the ease of use with the ae100 and the fact that the Ae100 cost me half of what the ELite did more than made up for the inferior image.
Last week I got the sanyo z1. It is (IMO) the equal to the Elite in PQ and the most amazing thing is that it cost me even less than what the AE100 did 7 months ago. So not only do I have all the bonuses that the AE100 had over the Elite, I now have an image which is just as good and in some ways better. I will never go back to RPTV. I loved my Elite but I am loving the big projected image even more.
So anyway, I say FP.
As for your budget, there are so many options that it is hard to say what your best option is. For DLP you have the NEC HT1000 which I hear is killer. The image it produces will be stunning and i doubt it can be beat for anything close to its price range. It is 4:3 ratio though.
For LCD I think the top 3 projectors under 4k are the Sony HS10, the Panasonic AE300 and the Sanyo PLV-Z1. The HS10 has the best resolution which means it shoudl be the best wiht HD material. It costs the most though The AE300 has the smoothscreen technology which reduces screendoor to almost nothing and it also has the best lamp life. The Z1 probably has the best contrast of the 3 and is also the cheapest of the 3. IMO, I doubt you could go wrong with either of those 3 choices.
I suggest that if possible, you take a look at both DLP and LCD projectors to see which technology/image you prefer. Then, go from there