Most projectors upscale in analog mode- meaning, they've already got the image and try to add resolution between scan lines.
In theory, upconverting at the DVD player means that it is done digitally- before the image is formed and should be better. In theory.
For me, my projector only has component inputs, so I have to rely on the internal scaler (which is great).
The reason for that is the MPAA has a stranglehold on this country and won't allow upconverted video to go over analog links.
I just read about this- and would have to find a way to import it:
http://www.engadget.com/2006/10/10/n...ng-dvd-player/