Not sure who you are replying to Kilrah or if it is just in general, but I'll take a shot at it.
Yes, you need to run things localy, aka have an OS. Snapdragon support both Android and Linux. Dev board can have external HDD - so, solved.
When it comes to optics, yes, this is extremely important, but its not a problem. There are plenty of suppliers for optics out there. Optics is the single most expensive part of any projectors because good glass is expensive.
If there is a will then there is a solution.