I posted a test/demonstration video of the technique back in August 2010 and used it extensively in 'Sex With Strangers' (0:36 - 0:49; 1:09 - 1:21; 2:03 - 2:22; 4:15 - 4:45)
The important thing to understand about projected textures is that it is a graphics effect, dependant on one's graphic card and your graphics settings in 'Preferences'. It is not enabled by default.
The effect created by projected textures is empathically not the same as that prim property that is controlled by the LSL (Linden Scripting Language) function 'llSetTextureAnim' Or, in layman's terms, "projected textures" should not be confused with "animated textures".
Whereas an animated texture only affects the surface face(s) of the prim it is associated with, a projected texture literally "projects" (or "beams", if you prefer) out of the originating prim and affects the lighting of other nearby objects and avatars in a manner that is analogous to a light beam. Note, that the technique can be used with *any* texture and this is what makes it significantly more useful than prim lighting.
Projected textures can be used to create a number of innovative effects, an example of which is Quinn's Magical Mirror Ball pictured in this blog.
As you can see from these pictures, Quinn and I (and our clothing, [or lack of clothing, in Quinn's case]) become illuminated by the coloured "light beams" (projected textures) as they rotate and revolve. The effect is dynamic and in real time.
Last week I became aware of the latest evolution of projected textures - the ability to reflect projected textures on high-shine prims!
Excitedly, I IM'd Quinn with the news.
I was not entirely surprised when Quinn replied that she had independently discovered this new effect herself, as part of her own experimentation.
"Yes, it is possible", Quinn told me, "I've noticed that yesterday :) At my place I have a spotlight pointed on a sculpted sofa. Setting the sofa texture shininess at "high" i noticed that it reflected the spotlight light."
Quinn tp'd over to my sim, bringing a demonstration unit with her. For the record, I was using 'Firestorm' and Quinn 'Kirstens'.
In this last picture, two prims have been set to high-shine. Ringed in purple are the reflections of the projected textures.
Expect to see 'Reflected Projected Textures' used soon in a Quinn Ying Production near you!