1. How much benefit will be had from moving to DVI/HDMI over component depends on the devices in question. With my HD cable box and my CRT display, the two are indistinguishable - but then again, HD cable boxes (especially ones from the time period that mine dates back to) had a bad rep for not implementing digital video output well. In your case (a modern source component using digital source material, connected to a display device that is itself inherently digital), the DVI/HDMI route offers some definite signal path advantages, with the absence of a video DAC being the most significant benefit.

2. Since we're talking about digital data here, you should either get the signal to the destination or not get it there. Adding connectors to the signal path in a long run like this offers a small opportunity for just enough extra resistance to yield signal loss, but that's just as true of adding simple cable length. I'm guessing that you're thinking of an HDMI-to-DVI adapter at the projector and an HDMI-to-HDMI cable, and I would expect that to work just as well as an HDMI-to-DVI cable.