we had a DLP project at my prior job and I found the rainbow to be quite annoying. I've checked out current Mitsubishi DLP sets at Fry's and couldn't make it happen so they've definitely gotten it to work better than before. They're using a 6-color wheel instead of 3.
The method they came up with to eliminate the screen-door effect is interesting.
http://en.wikipedia.org/wiki/Wobulation