Nik
The Infocus X1 along with a few other models are great projectors for people with limited needs..like me. While these bang for buck units don't display the number of lines that the higher priced models do, they still look outstanding with DVD's and can do a nice job with Hi-Def TV as well.
Like you, I am not big on watching TV. My wife watches a little..but not a lot. We both enjoy watching a good movie though so the X1 has more than filled the bill for us.
I don't want to steer you towards the X1 because there are other projectors that may better fit YOUR needs. I will answer any questions you might have about the X1 if I can though.
To answer your above questions:
1. It can connect to your DVD player in several ways, Component-S Video (this uses standard component cable at the Dvd player and $25 S-Video adaptor cable at the projector input). This is for interlaced video..the X1 has a great line doubler built-in.
2. For progressive scan video display, (component video cable with a computer type DB-15 connector on the projector end), my 45' cable cost around $60 but shorter cable is much cheaper. You do not need any type of converter box. You can also hook your computer to the X1 and use your computer as your DVD player if you wanted (needed) to. The X1 also has an DB-15 output in case you wanted to connect to your computer screen as a second display.
To use a TV with the X1 you would need a tuner, I have a Comcast HD-tuner. You could use even the built in tuner in a VCR.
Best Buy and Circut City sell the Infocus X1, you could take one home for a try. You would need to first buy the correct cable for your needs..mine did not come with cables that I spoke of above. (comes with the cheap little yellow cable). Not the best picture quality to test with.
You will not need to hook-up sound or use a screen to test the unit, any white (or light color) wall will work and give a fantastic picture. You will need a somewhat dark room and bright sunlite will wash out the picture. You could set your computer to 800X600 and test picture quality with it's DB-15 cable, you will need to set both for a 16.9 picture display or your picture will be 4.3 I would guess.
Hope this helps a little,
Dave