By the way: I attended my first digital projection demo last week in Lübeck, Germany - hosted by Kinoton.

A new swedish youth-thiller "The invisible" filmed digitally and projected with a Barco projector with Kinoton console and lamp.

We were told, that the film was for one reason or another, delivered not on discs, but on tape, which should be the excuse for lack of contrast - but sharpness on this about 12 meter wide screen (Scope) was nothing less than impressing ! The show started with a short, -filmed digitally, but shown on 35mm - absolutely unusable.
I'll wait for the next chapter (on discs) before judging. Sharpness was promising, but the depth and contrast, together with the projector priced about ten times a traditional one, gives me the hope, that I can retire, before the future takes over !

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We were told, that the film was for one reason or another, delivered not on discs, but on tape

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IMHO, current digital projectors still fall short of optimum contrast and black level. You can easily cast a distinct shadow in the projection beam of what should be a totally black area of a digitally projected image. Those with digital projectors should try casting a shadow in the beam while projecting black, (or a night scene or space movie) and you'll see what I mean. In contrast (pun intended ), KODAK VISION Premier Color Print Film can attain a density range of well over 4.0, or more than a 10,000:1 contrast range on the print itself. Even with normal lens/port flare and stray light, the black level is much darker, especially for really dark or black scenes.

For example, look at the thread reviewing "Minority Report" printed on KODAK VISION Premier film ( here ), where Aaron Haney wrote:

"...the print that I saw had amazing contrast. There was a "feature presentation" snipe which ended with a fade to black just before the actual movie started. When the cut to the real movie happened, I couldn't believe just how much darker the screen suddenly became. That continued throughout the whole movie. Very deep blacks. I appreciated that."

And David Stambaugh wrote: "The print I saw today was exactly as Aaron describes. When the black leader of the feature started, it was nearly pitch black dark in the theater -- I actually thought the xenon had blown or something, the screen was so dark. Well, the entire movie was like that - incredible contrast, and very deep, rich blacks. I don't think I've ever seen anything like this before. And no, the screen is not under-lit. There was PLENTY of brightness (focus seemed perfect, and the image was steady too)."

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John P. Pytlak, Senior Technical Specialist
Worldwide Technical Services, Entertainment Imaging
Research Labs, Building 69, Room 7525A
Rochester, New York, 14650-1922 USA
Tel: +1 585 477 5325 Cell: +1 585 781 4036 Fax: +1 585 722 7243
e-mail: john.pytlak@kodak.com
Web site: here Kodak Website

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If the image data was digital, whether it was on tape or DVDs should NOT have affected image contrast.

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Depending on what codec was used it sure can. Did it use the standard HDTV codec (which kicks DLP's ass), or did they use, oh say, DV? Maybe they used Realvideo? It's all digital.

It's usually NOT the lab's fault when you have prints that have "milky" blacks. Most labs maintain very good control of their process sensitometry, and follow the Kodak Laboratory Aim Density (LAD) method to assure proper curve placement when printing:

here Kodak Processing Specifications
here Laboratory Aim Density (LAD)

Underexposure in the original photography is a primary cause of "milky" blacks and increased graininess. An underexposed lower density negative requires a lower printer light setting, reducing the "d-max" achieved in the prints. If you have an adjustable 35mm camera, shoot an exposure series from -3 to +3 camera stops and get paper prints --- you will see that as the film is underexposed, the blacks on the prints get lighter, and the grain becomes more visible:
here Film Characteristics
here Sensitometric Information and Exposure

Another reason for milky blacks is that the distributor may have specified another manufacturer's print film having lower contrast than KODAK VISION Color Print film.

Proprietary "silver retention" processes can be used to futher increase the contrast and black level in prints:
here Processing Techniques
here Emulsion Manipulation
here Soup du Jour

------------------
John P. Pytlak, Senior Technical Specialist
Worldwide Technical Services, Entertainment Imaging
Research Labs, Building 69, Room 7525A
Rochester, New York, 14650-1922 USA
Tel: +1 585 477 5325 Cell: +1 585 781 4036 Fax: +1 585 722 7243
e-mail: john.pytlak@kodak.com
Web site: here Kodak Website