Actually, you're incorrect. It does work with projection screens as far as I know since I've seen them used on there, and there is a way to keep your s-video or component video connection. When the newer original PlayStations came out, they made an adaptor to make up for it taking up a port. You need one of these:
This has composite video, s-video, stereo audio, and a PS proprietary a/v port. All you do is plug this in, and then you can plug the composite video plug into the adaptor and that will satisfy the connection needed. Then you can hook whatever connection you would like up to the TV and be fine. This was invented when they took off the standard composite port off the original PlayStation since the GunCon had been designed around the original design of the system. Get one of these, all your problems should be solved. I actually use this on my Japanese unit so I don't have to keep swapping my s-video cable with my VGA adaptor on my Japanese unit.
As far as the usage of USB and video port, yes it has to do with accuracy. If you compare the original GunCon which worked off the normal controller port and a composite video connection, the light gun was 10 times more accurate than any other light gun available at the time. Now if you compare the GunCon to the GunCon 2, with USB, there is even better accuracy. Although there might be a slight bit of delay in the timing compared to the original GunCon but you may not even notice it. The difference in accuracy is noticable but not huge so you might want to try just a normal GunCon to see if it's more to your liking since all the games now work with both guns.