Why are you installing “multimedia” projectors in a cinema environment? Multimedia projectors are optimized for computer presentations (PowerPoint, etc.), not video playback. If your application is a multipurpose convention center type environment, then so be it, but if you are mainly going to use the systems for the projection of video material, I would strongly suggest you rethink using general multimedia LCD projectors and instead research native 1080p digital cinema projectors, even if they are higher end home theater models.
You don’t state what video format you’re going to be primarily showing – will it be SD or HD material? If it’s mainly SD, then a multimedia projector would be adequate. HD however, would be much better served by a native 16:9 1080p projector.
Most multimedia projectors are native 4:3 and top out at SXGA resolution, which is 1280×1024. That would allow you to play letterboxed 720p at native resolution, but any 1080p footage would be downscaled by the projector.
H.264 is a great codec for low-bandwidth delivery at a high level of quality.