First let me say I'm really happy you chose projection for your display method. When done properly it offers the very best picture quality available - better than LCD flat panels for sure. The main reason people look down on projection is because they haven't seen it executed properly. I train on home theater technologies for CEDIA (The Custom Electronic Design and Installation Association) and the CEA (the Consumer Electronics Association), where I do lots of presentations on display technologies and aspect ratios. I always recommend projection for the people who have the space and proper environment to set it up properly. One of the reasons I had been asked by CEDIA and CES to do these trainings is because I used to own a company called Integrity Home Theater, and we were unique in that we only sold and demoed projection systems. We used to hold national projector shootouts where we would compare projectors from up to a dozen different brands. (In fact, we were the first company that got to review the InFocus ScreenPlay 4805, the 16:9 version of the projector you own. In a shootout, the SP4805 beat out a 720P Sanyo LCD projector in terms of picture quality. The reason? The DLP technology 4805 had far superior contrast to the LCD technology Sanyo. Contrast always beats out resolution as a determiner of PQ.)
I also interface between Hollywood post production professionals and the home theater industry in my work as a consultant for Panamorph. Right now Panamorph is working with studios to try and get more resolution for Scope 2.35:1 / 2.40:1 films onto standard Blu-rays by "hiding" extra resolution behind the black bars.
Lastly, as you might have noticed by my signature, I work primarily as a film composer and sound designer. I have done the scores and sound mixes for over half a dozen films shot here in Colorado, so I know a quite a bit about surround technologies and the various surround codecs (like DTS and Dolby Digital). The last two films I mixed were 5.1 surround mixes released both uncompressed and in Dolby Digital versions.
Film mixes have hard and fast rules that cannot be violated when it comes to overall levels. Unlike music mixing, there is an absolute reference level that all films must adhere to in order to pass QC. Now, with new FCC regulations coming down on the industry, those level reference regulations have gotten even tighter.
Since I posted my previous reply, I did a bit more searching on this DTS issue. From what I can gather, certain DTS capable receivers (especially those from Sony) had a problem integrating the two DTS streams, resulting in audible distortion. It really doesn't have anything to do with loudness wars. And even the loudness war issues do not explain distortion or clipping. While the loudness wars have resulted in some *massively* compressed recordings, they should definitely not clip or distort. In fact, the loudness wars are a result of engineers pushing recordings with "loudness maximizer" software plugins that work by compressing the signal as much as possible
without clipping or distortion.
I don't own the Daft Punk album but I have been interested in picking it up. I can play it through two reference systems here at home - one my mixing studio, and the other my reference theater.
I would like to check out the links you mention.
As far as the projector you own, as you pointed out, it has a fixed pixel array of 800 x 600 pixels. You can actually walk up to the screen and count them. The absolute maximum resolution you are ever going to get is 800 x 600, and that is with a native 4:3 signal. As soon as you route 16:9 to the unit, 150 rows of pixels need to be shut off to get the 16:9 aspect ratio to display properly. That means only 450 rows of pixels are lit up. As you can see, that is slightly less than the 480P spec of standard definition. If you put in a Scope movie - one with a 2.35:1 aspect ratio - you will end up with only 340 vertical rows of pixels lit up. Again, you can walk up to the screen and confirm these numbers - if you find yourself bored one day

The extra rows of pixels are literally shut off. Next time you project a 16:9 source, simply walk up to the screen and you can easily see that 150 vertical rows of pixels are simply dark.
Lastly, your point about 1080P displays is a good one. It is absolutely true that
only 16:9 aspect ratio source material is actually 1080P (as in, 1920 x 1080, or FullHD). When you watch 4:3 material on a 1080P display (projector or flat panel), your resolution is now reduced to 1440 x 1080. In this case, 480 horizontal rows of pixels are shut off. When watching 2.35:1 material, you are actually looking at a resolution of 1920 x 810, with 270 rows of vertical pixels shut off. This last is directly what Panamorph is addressing with the major studios. We are trying to get a full 1080 lines of resolution encoded onto 2.35:1 films so that they can be displayed at 1080P on 4K displays and projection systems equipped with an anamorphic lens.
Fixed pixel displays - like your projector and all other current display technologies - are simply limited by the number of pixels available in the imaging device. Yours has 800 horizontal pixels by 600 vertical pixels. Fitting 16:9 material into that 4:3 space means simply having to turn off pixels to make it happen.
Lastly, you mention that your picture is just too sharp for it to be the resolution I am claiming. However, the resolutions I am claiming are correct. So why does the picture look so sharp?
Because it is.
Sharpness and resolution are not precisely the same thing. If you were to upgrade to a 720P projector, and then a 1080P projector, you would be able to discern greater and greater levels of fine detail. That is not the same as sharpness. It's like this whole (basically useless) obsession with 4K panels currently hitting the market. Unless you sit less than two screen heights away from the screen, you will never see the extra picture detail. A 4K display will not necessarily seem "sharper" than a 1080P display - it's just the level of fine detail present.
The other explanation for why your image looks so sharp, especially with Blu-ray and HD images, is because there are other improvements in the HD picture over SD beyond just resolution. Improved color space / gamut, less motion and image artifacts, etc. All of this is quite visible, even at 450P.
Lastly, I will wrap up this extremely long post by pointing out that contrast, brightness and color *always* trump resolution when it comes to perceived picture quality tests. That's why a 480P DLP projector beat out a 720P projector in the shootout I mentioned. The 480P SP4805 InFocus projector had far superior contrast than the LCD, which could be noticed from ANY seating distance in the room. To see the extra detail that the 720P LCD provided, you had to sit much closer to the screen. Yet the image still looked washed out. Poor contrast is the culprit.
Please know that I was not intending to bash your equipment in any way. I was trying to answer your question as to why you may not have noticed a huge improvement in Blu-ray and also why you might be experiencing the audio issues.