There are two ways to approach it: the first way is to think of the overall cost and with that in mind, there’s no question that a rear-projection television is much more affordable. It is however a type of technology format that is slowly dying (flat-panel TVs are killing off rear projection) and it also takes up a lot of room on an aesthetic level.
The preferable choice in my opinion is a two-piece projection and screen solution. It is more costly, but you will have more screen size choices (you’ll also end up with a larger screen in all likelihood), and a easier upgrade path to allow you and your budget to grow into whatever is next in terms of technology (CinemaScope now for example and the development of 3D, which isn’t far off).
I would start by looking at projector manufacturers like Epson, Panasonic, InFocus, Sony, Optoma, Sanyo and Mitsubishi. They offer 1080p products that range in cost from approximately $1,000 to $3,500 and technologies that include LCD, DLP and LCoS (a type of LCD), and you can mate one of these products with screens from companies like Elite Screens, Vutec, Screen Research, Da-Lite, Draper, Dragonfly and even Stewart Filmscreen.
From there as the costs begin to come down you can look at investing into an anamorphic lens and screen. Companies like Panamorph make really good anamorphic lenses and it will transform your media/home theater room into a true home cinema without the black bars and a wow factor that will awe your family and friends.