[keithwalton]

A good analagy of a modern projector is that of a mini lcd moniter, as that is basically what they are. a High resolution lcd (usually 1280x1024 or abit less which is the same as most 17"-19" lcd moniters) squeezed into a 3" panel. Replace the backlight in the moniter with a high power lamp. As said they are rather strict on these cold cathodes wont cut it.
Then instead of a glass / polymer front to the moniter replace it with complex magnifcation optics instead.
Squidge all of the above in a small package and there you have yourself a digital projector.

There high price tag is quite easily justified compared to that of a desktop moniter. The tft panel alone is worth hundreds as its got to be nigh on perfect (zero dead pixels as they are very noticable when they go due to the size each pixel comes out on a 100" projection) and that much higher density of pixels is used.
They are indeed an expensive hobbie