Our current projector is a hand built projector. I have been running this projector for approximately 4-5 years and I have never had a problem with it. I am currently building a new projector (for my HDTV Viewing needs/wants) and will be displaying it soon.
DIY Video Projector
Click here to see work on my new setup (ver 3)
I am actually working on version three of my video projector. The third version is much more advanced. This projector has been used for the better part of 4 years now and has always impressed.
With that said there will be a new version out soon. I use the projector below but I am working on a new one which will be HDTV compatible with a new lighting system.
Components needed for your own DIY Video Projector
Overhead Projector (cost $25 used) (State Auction)
I use an older Bell and Howell Overhead Projector. This helps a lot because it also comes with the lenses (and a bult in lens adjuster). The one I use has a 600 watt DYS (Halogen) bulb. It plays a little with the colors (skews towards yellow) but is plenty good enough for what I want. The only way to tell is if you are extremely picky. I have been told (and I do agree) that this projection system is better than our local "budget" theater. It compares somewhat to our local "expensive" theater but their sound system is a bit better.

What is a projection panel?
A projection panel is a lcd screen that is designed to go on a overhead projector. These were used at various businesses and educational facilities before the current trend of video projectors came out. The overhead projection panels were very expensive (between $2000-$30,000 ea.) and although the worked well most institutions have "upgraded" to the all in one video projectors.
The projection Panel I use is a Nview Spectra Plus
It does 640x480 with 1.6 million colors.
Projection Panel $50 Shipped (Ebay)

This is pretty much all that is necessary. Its ugly. In order to approve the WAF (Wife Acceptance Factor) I decided to pretty it up somewhat.
On my projector I took a $20 black TV stand and hacked it apart to place all of this inside. This allows it to be somewhat hidden from view. I also added a cheap DVD player ($60) so that this would have its own dedicated system. The sound is transmitted wirelessly to a receiver (which is hooked into our home theater surround sound unit).
04/18/2006 update This has since been changed and it is hooked directly into our HTPC (as well as the DVD Player).
TV Stand $20 (Walmart)

Total Cost $95
Bulb Cost $ 4 ea
The bulb cost is where the savings is really at. A typical bulb (for a projector) runs between $300-$500 ea. They last a while longer (most are rated for several thousand hours where as mine is only rated for 75 however mine have lasted an average of 150/200 hours). In the end it still comes out somewhat cheaper to run my projector (plus you dont have the outlay of $300-$500 at one time). We use the projector somewhat sparingly (a movie every week or two) and at that rate I have changed my bulbs 2x in the past 4+ years.
Conclusions
I have now built several of these. They are simple, cost effective, and just plain neat to have. I use this particular projector in the living room and it works great. I am also prototyping another design that will be able to do 1080i HDTV. Cost for that one is approx $300.
More information coming soon.