A neo scaling DVD player can be had for around $US200 all up, a momitsu V800DX for a little more - either would be a superb investment to get the most out of that screen. Spending huge bucks on that screen to get a substandard picture from DVD for the sake of a few hundred dollars is nuts.

1) CATS is the automatic brightness/contrast setting that is meant to cater for ambient light - its awful, turn it off.
2)The SE discs look better because they are a better transfer from a mostly restored print. The 3:2 has far less errors than the OT laserdiscs had, the colour is far superior, and there is a lot more detail on the discs themselves. So they will look better on your set. If you can get to a high end AV store though, get them to play it through a terranex scaler, then you will really see what a scaler can do

But anyway, we are getting off topic. PM me if you want more details.