When I decided I wanted to go the PJ route poor color reproduction, DLP rainbow or LCD screen-door effects were among my biggest worries. I couldn't (and still can't) afford a top of the line unit so it was either bottom of the crop or a ~36" LCD. I finally pulled the plug and got a 720p HD70 for a whopping $920 and ya know what, I couldn't be happier. Well I suppose I could actually as I'm sure a $5k PJ would have been even more awesome, with many more features. Would-have could-have should-have - fact is I don't have that big a coin to drop.
Ever since I got it set up my house is fairly often used for movie-nights and none of my friends or family ever complain. Of anything. I don't see any rainbows and no one else ever did, the colors may not be 100% true, but what is true anyway?
I would agree with you to the extent that HQ = money and if you were watching the likes of the X10 and some high priced, high quality unit side by side it would likely be a no-brainer verdict, but in the absence of that, the only question is do you like what you (can) have - I do. I certainly prefer it to a 50" plasma which is not only twice as expensive but in my case less than half picture size. So when my bulb finally gives up the ghost I may well go for the 1080p X10.