Hmm, well I see I've offended at least one person here. It isn't my intention to offend, if I wanted that I would post at any car board or sports team board. This place is a great place for information and is a very friendly board. That is why I post here.
Why do we go to the movies? I go because I want to 'escape from reality'. Only when one's field of vision is completely consumed, can we gain that 'being in the picture' feeling. Televisions can never recreate this sensation because they do not fill one's field of vision.
I would encourage anyone to take one of their DVD's and a transcoded copy of the same film to one of their local hi-end a/v shops. You know, the places that are open til 6pm and always empty. The one's that sells insanely priced gear that only the foolish buy. Ask them to demo their $50k projector that's being fed the video signal from a $40k scaler. (This is nowhere near my setup, lottery anyone?) Watch the original. More than likely, it will look amazing.
After you have a feel for the 'quality' insert the copied disc. More than likely you will not, yes that's correct, see a difference. At least not at first. In time, you will observe the picture just isn't as 'sharp'. In fact, it may even be comparitively soft. The picture will appear grainy, there will be traces of snow. You may notice mpeg artifacting that wasn't present before. Color's will not appear as bright or vibrant. Sit close enough to the screen and you will actually be able to make out the pixel structure on the screen (tho true with the orginal as well). All of these flaws are magnified on this kind of setup, because they are brutal with less than pristine sources. Switch back and forth between the two, the differences will be there. As you scale down in price points, the differences will become less apparent tho still present.
(At this point, ask for a demo of anything hi-definition and prepare to pick your jaw off the ground.)
I realize this is an extreme example. This type of setup is not attainable to most folks. However, a projector and screen combo that gives very good results is within the means of most people. I know of folks who just project the image onto a wall, and are happy with the results although I would never recommend that myself.
Going the projector route is very much like going broadband. Once you've experienced it, it's hard to go back. I still have televisions and in fact they are my primary viewing devices. Backups will always look fine on televisions. That is why I backup my DVD's. Transcoding does remove information and once it's removed it can never be replaced. Encoding, btw is very similiar. The breaking down and rebuilding of frames will always effect quality negatively.
In summary, backup's work fine for televisions. For projection systems, see if it works for you. IMO, and other's have shared in this too, it will not.
To anyone who has read this far, it is only my intention to offer advice and/or make suggestions. Moving forward I will tone down my approach. To those that I've offended, I am sorry.