I was in the same boat as you... As my projector can tops out at 1080i.
I think the real question here is the difference between progressive and interlace... It's not just about resolution.
[ A ] The earliest known form of video compression was the use of the interlaced format, developed roughly 70 years ago to address early TV technology challenges and broadcast bandwidth constraints.
In interlaced video, each field of a video image displays every other horizontal line of the complete image. For example, in the first interlaced field, the even-numbered lines making up the complete image would be displayed, and then with the second field, the odd-number lines of that image would be shown. Repeat this even/odd interlaced sequence frequently enough, say 25 to 30 times per second, and the "persistence of human vision" allows a viewer to see what appears to be complete moving images.
The main benefit of interlaced video is that it allows more detailed images to be created than would otherwise be possible within a given amount of bandwidth -- in effect, interlacing allows a doubling of image resolution. But interlaced video comes with real-world downside, including image softening that occurs during fast-motion sequences as well as moire or strobing artifacts that sometimes appear when striped shirts, plaid jackets, bricks in a building, or similar types of objects are shown.
Progressive video, on the other hand, is made up of consecutively displayed video frames that contain all of the horizontal lines that make up the image being shown. As a result, images appear smoother, fast-motion sequences are sharper and artifacts are much less prevalent.
The primary drawback to progressive video, at least until very recently, was the higher bandwidth requirement. But today, television systems and packaged media such as DVD are moving away from analog transmission and storage to digital variants, allowing considerably more efficient video compression to be applied. This results in even higher resolution images than were possible via interlaced analog video, using the same amount of bandwidth.
While interlaced video will continue to be with us for some time as a result of the 1,080-line interlaced (1080i) HD format used by broadcasters in the US and some other countries, both displays and packaged media are moving exclusively toward progressive video formats, such as 720- and 1080-line progressive (720p and 1080p) formats.
In fact, all digital, non-CRT displays are natively progressive, and any interlaced video signals they receive must be converted, or "de-interlaced", to the progressive format before they can be displayed.
For me, personally I like the liquid flow that progressive offers and I often watch sci fi movies with action shots ... So, I choose 720P over 1080i, but if your just watching the simpsons or the family guy, I'd think 1080i would be great for toons in HD.
Here is another take...
Interlaced scanning shows half of an image (on the odd rows of pixels) every sixtieth of a second, and then it shows the other half (on the even rows) the next sixtieth. Therefore, it takes one thirtieth of a second to show a complete frame, giving a framerate of 30 frames per second.
Progressive scanning shows the entire image every sixtieth of a second, so the framerate is twice as high - 60 frames per second.
Therefore, progressive scanning creates a smoother image, and is preferable if you have a choice.