Just to clarify the 4805 is not a 720p projector, it's a 480p max (854x480 resolution) projector. It is still a solid pj, and at current prices (especially used) it isn't a bad purchase but a true 720p projector will be a significant upgrade, and the price isn't that much different (+350 more for a new 720p model vs. ew 480p).
I would recommend a Mitsubishi HD1000U for around $850 shipped (check AVS forums). The picture is fantastic with Hi Def sources (360/PS3/HD-DVD/Blu-Ray). Wish I could post some screenshots but I'm not with the projector to take any for a few months.
Projectors are cheaper than HDTVs and offer larger picture but you must factor in - installation difficulties (throw lengths, offsets, etc - not just plug and play), lamp bulbs (cost can be around a third of the PJ itself and can last as little as 1k hours), and quality control issues.
If you are willing to negotiate those, and you can couple it with a 5.1 or 7.1 surround sound setup, definitely make the purchase. The looks on my and my friend's faces when we play on the projector is amazing. It really is a whole different experience.
Feel free to ask any more questions if you'd like to - I've spent a lot of time researching projectors and sound setups in the past year and would love to help some other people to experience the best kept secret of gaming - projectors (while keeping a cheapass budget of course - you can get a fantastic system for anywhere between 1k and 1.5k (which is a lot of dough, but consider the price of a flatpanel TV)