If you're asking yourself "what is this rainbow effect?" right now, you probably have nothing to worry about. If you've ever been to a Best Buy or the like, and walked through the whole TV section without noticing it, you're probably not going to have a problem.
I picked one of these up when Woot first put them up, and I'm super happy with it. I use it as my primary monitor because I edit HD video, and its important to be able to see that video in full HD, large enough to notice little artifacts and such.
Its no BS, its full 1080 native. Some projectors BS you by telling you what resolutions they are 'compatible with' meaning they scale the image down. This is not the case. This projector is true HD, for under $1,000. That is what has made it such a big hit, as it was one of the first HD projectors under a grand.
Why so cheap? Well, a big part of the price reduction is a loss of features. Many 'high end' projectors have very powerful keystone features that allow you to place your projector off axis, or less than parallel with the projection surface and correct the distortion. While this projector can do that as well, it doesn't have as much flexibility.
This isn't as big of a deal as you might think though, as you can stack boxes, or move furniture to put this baby near the center of the room and get a good picture.
$600 and you get a 100+ inch screen in HD. It is wonderful for split screen gaming on Xbox 360, or a wide field of view in a flight simulator. I also watch a lot of netflix on it as well.
Just drive over to your local fabric store and pick up a few feet of 'blackout cloth.' Its cheap, reflective and easy to tape up with painters tape, or staple into a simple wooden frame. I used my phone's light to find the fabric that let the least amount of light through and had lower specularity.
Lastly, I'll say if your biggest concern is the dreaded rainbow effect, drive on over to Best Buy or Walmart and take a look at their DLP TVs. If you don't see any problems with them, you won't have issues with this projector. Contrary to popular belief, the bigger screen size has little impact, as you tend to sit further away from a bigger screen, and your eyes don't have any concept of how far away the image is. Looking from 15 degrees left to 15 degrees right is all the same no mater how far away the object of focus.