If you haven't adjusted anything in the VSX-33's Video Parameter menu, it's doing the processing and sending a 1080p signal to the projector, which does virtually nothing to such a signal. To check, open the AVR's Video Parameter menu and make sure the V. Conv parameter is set to On, which is the default. (If it's off, the AVR is doing no video processing.)
Most Blu-ray discs are 1080p, so there's little if any processing to be performed in that case. Blu-ray movies are stored on the disc at 1080p/24fps, and the Epson 8700 can display this at 96Hz (each frame is displayed four times), which is smoother than displaying 24fps at 60Hz, so make sure the Epson's 4-4 Pulldown setting in the Signal menu is on, and set the Pioneer's Res control to Pure or 1080/24p.
Some Blu-rays store content at 1080i, and most HDTV from the satellite is 1080i, so these signals must be deinterlaced. You're right that the Marvell Qdeo chipset is excellent, so having the Pioneer do it should look great. To be sure which does a better job, look at some 1080i content with the AVR's V. Conv control turned on, then again with that control turned off.
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