You'll find a lot re this in the HCPC forum, but the main thing is you can set the PC's resolution to the precise resolution of the projector, giving a very clean image. You also get a progressive image for both NTSC and PAL. You can also add things such as TV tuner cards, turn the PC into an MP3 jukebox, make it work like a TIVO, etc.
You could put a PC together for around £350.
BUT the useability will inevitably be a little less slick than a DVD player, so the WAF (wife acceptance factor) may be a tad low.
If I were you, I'd consider importing the Philips Q50 from
http://www.hivizone.com, or from an Australian site (Amelia has recently bought one over there, and is researching suppliers who will export to us poms). The UK model of this player is nothing special, but the Far East model has progressive scan, which can be enabled for PAL as well as NTSC. Have a look in the thread about the
AE100/Epson mini shootout - you'll see they rated the prog scan Philips 962 (same as Q50 but SACD player too) as VERY close to the HCPC. See
Amelia's thread for more discussion on this.