120" is a big screen!!! Are you going to be far enough away?
The picture depends on the source component - Sky varies wildly due to compression, DVD's vary depending on how good they're mastered, and of course, a better DVD player will look cleaner than a cheap one.
Properly mastered DVD's you can put on a projector, show a clip to someone with an untrained eye, and they'd think it was HD. Close up shots on DVD look great, DVD can deal with that ok, it's just long shots where compression is more noticable. A badly mastered DVD won't look very impressive at all.
I also use a Wii for playing MarioKart online with friends (yup, I have some, even if they are just gaming friends
), which is SD, and that looks fine too, although the component cable is recommended.