Sound is half the experience. You will need a good mic and an audio
recorder - the audio recording on the 550D is terrible. Lighting is
what separates exposed footage from well lit footage. Yes, you can
get an image just by pointing the camera, but to get good quality
footage you will need to learn how to light a scene. You have a good
tripod already, right? A nice shoulder rig helps with handheld shots
and since you will be shooting with a shallow DOF an follow focus is
very helpful.

Have fun with your shoot. I hope you return to show us you movie.

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The aim of an argument or discussion should not be victory, but progress.
Joseph Joubert, essayist (1754-1824)

Awesome. Thanks! Yea I have peeps who are doing the sound and lighting... I just didn't want to waste everyone's time by going to all that trouble if we're using a camera that isn't good enough... You know?

The only correct answer to your question can be "it depends". Various festivals have different criteria and requirements. Also, it will depend on what is your intended output medium. Will you down-converting to a DVD? Blu-ray? A film-out to 35mm?

Most professional cinematographers will tell you that video captured by consumer cameras, including DSLRs, tends to "fall apart" when projected on a full-size theatre screen. Having said that, there are plenty of commercially produced, and relatively widely released films that were shot on HD camcorders (even SD). The main point is, while there is an obvious reason why professional cameras cost as much as they do (compared to the $2500 5D mk II), the image quality of the acquisition device is just one of the factors in the whole movie package.

Many have argued (some of them even pro cameramen) that in a movie, quality of sound is much more critical than image quality. If you think about it, you'll understand. Audiences will easily forgive poorly exposed images, but crappy sound that is difficult to understand will very quickly force people out of the theatre.

Acquiring good enough audio shouldn't be too expensive, but can be tricky for the inexperienced. You should really give very special attention to this, and I'm stressing it because practically everyone who approaches this forum with questions such as yours is usually completely oblivious of the importance of sound.

Finally, to give you my own personal opinion on your original question, I think yes, 550d images, if acquired with care and exposed/lit properly, will look good enough on a theatre screen, as long as the story is engaging, sound pristine, and performances sincere.

Yep. Thanks for that, our out put would be DVD.

I'm very much aware of how important sound is. That's why I have other people doing sound who know what they're doing and I trust. I just didn't want to let their work down with the camera.

But your comment was very helpful so thanks!