Hello Ken,
There are a couple of factors that will have an effect on the picture quality:
1) I would assume that the scaler in the i-Scan HD is better than the scaler in the Sharp projector. (Those DVDO guys are really good!) I'm really not sure how much better, and in what ways, and what kind of impact it would have. You would also want to make sure that when using the DVDO scaler that the Sharp's internal scaler is defeated. Otherwise the signal will be scaled twice, which will definitely degrade the picture.
2) The i-Scan HD uses an external switching power supply. Switching power supplies always introduce noise into the system, which can subtly (or not-so-subtly) degrade the picture quality. There are a couple of things you could try to offset this. One would be to use some kind of power line conditioner. However, I would be tempted to go to a surplus electronics store and find someone that likes to build one-of-a-kind projects. I bet they could build you a nice linear (non-switching) power supply for $200 or $300, which would probably make a nice improvement.
The only way to know how much improvement there is to be gained by using the i-Scan HD will be to run the experiment.
As far as connecting the DX-7 to the i-Scan, I would try the DVI connection first since you already have everything you need to try it. Both DVI and SDI are digital connections and offer excellent signal quality. There are two differences betweent them:
-- The DVI is progressive, while the SDI is interlaced. However, both the Ayre DVI board and the i-Scan HD use the Silicon Image SiI504 deinterlacer and should have equally excellent deinterlacing performance.
-- The DVI signal is RGB, while the SDI is YCbCr. Remember that the disc is always YCbCr and the display is alway RGB so there must be a conversion performed somewhere, either in the player or the scaler or the projector.
There is a *very* slight theoretical advantage to performing the conversion in the projector. You can check this with your current equipment, as both the DX-7 and the Sharp can accommodate YCbCr signals across the DVI connection. *If* there is a noticeable improvement when using YCbCr over RGB, and *if* the i-Scan HD can output YCbCr on its DVI output, then you *may* have *very* slightly picture better quality when using SDI.
(This last point depends on how the internal processing is done in the i-Scan. If it is done in YCbCr color space, there is a greater likelihood of some slight visible improvement. If it is done in RGB, then it is much less likely that an SDI connection could improve things, as there will be two additional color space conversions.)
Also, remember that you won't have to "modify" the DX-7 to add SDI. Instead, send the unit back to the factory and we can install the Ayre SDI board (along with a new rear panel). The main advantage of SDI is to allow for a lower system cost, as the SDI board is significantly less expensive than the DVI board.
Have fun!
Charles Hansen