We had one built in a former house and just never used it enough to justify it (it was a full theatre room) - I would use a large TV going forward - technology is changing so fast that you get locked in with an expensive projector. We loved the room for certain movies (Days of Thunder) and when people came over - but no one would ever go in to watch TV by themselves, which is where I think we lost interest in putting one in our new home.
If in a central location, then you'd likely be ok to do whatever with it. If it is off the main living area, I would be careful about just going for a projector.
We had all in wall speaker (full Yamaha system) - I would definately put the speakers in wall using QUALITY speaker wire that is sealed for such uses.