I would suggest not doing it. Removing heat from around the TV will be difficult if the TV is completely enclosed. In addition, when this TV eventually needs to be replaced you will be stuck trying to find a replacement that fits the particular dimensions of the hole you have created. There are lots of folks now with 4:3 32" holes and most of the new TVs are 16:9 and much bigger than 32". A better idea would be to surface mount an LCD or plasma TV to the face of the wall.

I don't know what kind of rear projection TV you have, but I've noticed that the DLP sets seem to put out less heat compared to the others.
We haven't bought one yet, but when we do we will have to take into consideration that there is a thermostat near the back of the TV, so the DLP is the route we will probably take.
As far as recessing it into the wall, I agree with dgmarie.
We made that mistake 34 years ago by recessing in a wall, a TV built to be put into walls.
Well, over the years styles, shapes and sizes change. We couldn't easily repair the hole in the wall because the top half of the hole was surrounded by wallpaper and the bottom half was paneling. What we ended up having to do was put in a built-in bookcase where the hole was.

Dear god....

Shoot me now....