No problem with sharpness. Overall, very good, but not the best around. Of note, the Sanyo PLV-Z5 produces an exceptionally sharp image for a 720p projector, and the HD65 can't match it, but, with 720p resolution projectors in mind, I certainly had no complaints while filling about 120" diagonal of my 128" screen, and viewing from just under 12 feet back. Moving up to a 1080p projector will resolve more detail, but, that means spending close to twice the price, or even significantly more.
Bottom line: Sharpness is just fine. I seriously doubt that it will be factor for 98% of the folks shopping for a 720p projector!