My first animation film, I did it in DV 16/9 interlaced (720x576) and the projections in the theatres were excellent.
For my new WIP, I make the renders in 1050x 576 square pixels progressive.
I made tests in a theater: the image has a higher quality than the HDV (live films).
I also made an upscaling in 720p and the quality seems better, but I believe that it's the projector which should not convert this format while the 576p is not a standard format.
I must add that I 'm working in postwork with uncompressed AVI and my renders are done in .tga or .bmp sequences.