Here's a couple of the first reviews of the digital presentation of Episode I:

Zan writes:

"I just returned from the first DLP all digital screening of Star Wars in Los Angeles. From the moment the DLP trailer came on, the amazing difference in picture quality was apparent. In the opening scene, the stars and text crawl were so sharp, that it actually looked 3D! I had to walk from the back to the front of the theater and from side to side to find seats and the picture was equally clear and sharp. I also noticed that the picture was rock steady, and the shaking usually caused by bad timing in the shutter was completly absent. From my third row seats, I couldn't really see any pixels even though I was only about 10 feet from the screen. The only place where pixels were a problem was on things that were in focus and not moving, such as the subtitles. Still, they didn't detract from the total experience. During the credits, me and a large number of people went up to the screen to look at it up close. Seeing this, the projectionist turned on the lights, and the amazing thing is that the picture was hardly affected by this and lost very little contrast. Upon examinig the credits, I could see the pixels were rather large, about a square centimeter, but it looked like each pixel was made out of four smaller pixels, which would mean that it is possible for higher resolution movies to be shown, although this resolution is fine.

The rock steady and flicker free picture, the absence of reel change symbols, and the incredible sharpness all made the movie more enjoyable then the film version. Although DLP has its disadvantages such as in the subtitles and with security concerns (I overheard an theater security person talking about lucasfilm's worries about digital piracy), think that DLP will catch on, at least in the larger theaters. The DLP projection was was really worth seeing, and i urge anyone in southern California or New York to see it before July 18th."

Also, Ted writes:

"I just got back from the 8:00 digital screening of Episode 1 at the Paramus Rt. 4 Tenplex. The digital projector is set up in theater 1, which holds about 600 people. I was somewhat disappointed to find that there were probably aboout 100 empty seats remaining at the start of the movie.

Anyway, the digital projection (the Cinecom version) was excellent. The major differences from the standard film projection were that colors were more intense, and details were significantly sharper. On the whole, the effect was that I could spot background details that I hadn't noticed in my 5 previous viewings of the film. Additionally, in many cases depth was more realisic. I believe this was due to the sharper colors.

On the whole, I'd say that the picture quality from the digital projection was about 20% better than the standard film projector was on the same screen. I saw TPM in the very same theater on opening day, which makes for easier comparison."

It sounds like digital TPM is really fantastic, and we have yet to hear of a negative opinion of the new format.

UPDATE
Chris writes in, and here's an excerpt of his review as well:

Okay, so I turn around and the jaw drops in awe when I see the 3 colors projected like a rainbow through the theater. It was beautiful. The Fox logo has never looked so brilliant. The stars of the opening crawl never have sparkled so bright. Just when I thought I had seen this film so much I knew all the little things to looks for - I found myself noticing new characters in the pod race crowds - and even little details from algae on the outer walls of the Gungan city to the shrap blades of grass in the battle field at the end. Unreal. I was amazed at how un-pixilated it looked and the lack of digital strobe I expected to see. I did notice it in a few spots where there is a lot going on and things are moving fast right to left or left to right - but other then that, when you take into account that there will never be scratches and there are no film reel chages causing any skips, it's not a bad trade off. All I'll say is that every film you have ever seen in a theater was vhs. This is dvd.

Then, GLYPHIK tells us about their experience:

From that moment it was almost a whole new world. The crispness and clearness was unbelievable from where I was sitting in the center and I saw no pixelization. It was the clearest movie I've ever seen in my life. It was like whatever was on the screen actually existed right there in the theatre. Of course, some people may not pay much attention, but for me it made a GREAT difference in the pod race, the Gungan battle, the approach to Theed, etc.
Oh my goodness, my friends you should have seen it, it was absolutely brilliant!

Then finally, R. Jason contributes this review of the digital Menace:

The colors on this print were amazing and the details crisp and clean. I noticed things I never saw before -- the Kaadu have a beautiful orange hue to them, Sebulba's skin is surprisingly purple in spots, the water as seen through the bubbles of Otoh Gunga and the cockpit of the Bongo was an electrified blue, the glow of the lightsabers was intense, the details of the Droids when they were destroyed by the sabers was awesome, the sunsets on Coruscant where fantastic, the energy binders on the pods blinding and bright purple, the darks were blacker, and the great detail in the faces of the members of the Jedi Council and the architecture surrounding its building.

I can go on like this, but sufficed to say, it was beautiful. Those with DVD players remember the first time they realized how much sharper the image quality was over VHS will understand. I can easily make the same analogy here.

Thanks for all the reports!