I'd rather spend the money you have now on either a decent projector and screen setup or sound system - not both. The reason being that you're either going to end up with a crappy sounding system with great video or the other way around.
You could also go the regular TV route, but a 100 inch screen is just too gorgeous to pass up.
I'd just get a Sony VPL-HW10 coupled with a ~100inch screen(should go a bit over your budget but boy is that a good looking home theater setup!). Trust me - you're not going to regret it!