I've seen some peoples setups using 17" High definition lcd's that are pretty dang impressive. The higher end/ better quality build pj's using high resolution pc monitors are very nice too. I personally opted for the smaller, cheaper projectors. Mine (although indefinitely on hold for more important matters...plus the fact I have a commercial one right now) utilizes a psone lcd. My bulb will last roughly 10,000 hours, and costs $20 to replace. Resolution isn't great, but good enough for a rec. room definitely. I have roughly $100 invested in it.
There are three main benefits to a diy lcd projector
1. Long Bulb life.
2. Cheap replacement bulbs
3. New addition of small scale (17") High definition lcd panels.
A commercial high def projector is still mucho bucks, so a high definition capable pj for $1000 is a deal. What scares me from the high end ones, is that is doesn't take much to create a $1000 brick. The lcd can be scratched or fried during the build...there went $200. I don't know about the rest of people, but I have a problem with throwing away $5, much less $200.