I shoot almost everything with the Letus Extreme/HVX200. That includes short films and feature length films. And I have shown one of my films in a theater as well.
To answer your question: YES! The movie "Dancer in the Dark" and "Blair Witch Project" and many other movies were filmed with standard video such as the VX1000. They made it to theaters. Going HD is in itself sufficient for a theater viewing. The Letus is just a component and will certainly not interfere with a theater viewing experience. Now granted you will probably not get the same result as a genuine 35mm film or a genuine uncompressed image using genuine 35mm cameras but you will probably get the same result as a genuine 16mm film blown up to 35. Here again there are many films which where shot on super 16 and blown up to 35. Now I'm being told the RED gives you the best 35mm emmulation results at that pricerange. However even the best shot RED film will not hold up to a better story and better acting shot with an average looking Letus film.