its been about 2 years since I build my theatre but I used a 720p DLP projector and found it on clearance at the time with a two year warranty for 680.00
The best obviously is an LCD (or at least at the time) 1080 projector, my buddy has one and I watched it and noticed a crisper cleaner picture but for me not worth the extra 1g. The big thing I was always told to look for was color and brightness as well, but a lot of that can be changed in the settings during calibration. Some people are sensitive to seeing rainbows, and that has to do with the color wheel speed.
fortunately I do not have that issue so I could buy a less expensive projector.
IMO spend more money on your screen, there is much to be gained by using a quality screen for your light setting. I used a screen that cost me 800.00 but was worth every penny.