I think it all depends on what's meant by picture quality really. I demod an Optoma HD20 projector, and while the colour intensity, (in a room not fully darkened), wasn't as good as on my old (WHF award-winning) 36" CRT, there was a certain quality to the image that made films much better.
Watching the same scenes again on my TV, though I could see the more vivid colours, get deeper blacks in a lighter room, and have no chance of rainbow effect, I missed the projector. While the size was a factor, it wasn't the whole story. There was a certain natural quality to the projected image.
But for me maybe it's about a different type of experience rather than what's best as such. The projector was great for films, and sport, but would I want to apply the same experience for the news, while burning a bulb? Maybe not.
If you're talking about "tech spec" performance though, with LCDs and Plasmas still inferior to CRTs in many ways, and the way the Optoma performed, I reckon the high end projectors would definitely give the current high end TVs a run for their money, in a suitably darkened room.
WHF, any chance of shootout out between say a top 50" plasma, and a similar priced projector?