I think that is probably the solution. I've seen somewhat similar systems that tried to be more technically advanced than that, but they always made things worse. Just a straight-up camera-feed to the projector would work great though.

The advantage of these over overhead projectors would still be pretty small though (really only the being blinded and replacement bulbs issue), so you would need to ensure that the system is rock-solid reliable. If not, then you've just made it worse by making it more advanced.