imacmacosmouse
The best way to explain it is… You know how when you're at the dock and you put your mouse over something and it magnifies it? It doesn't do that for me, I have magnification turned on yet that feature doesn't work unless if I click on an app then it will magnify until I stop clicking it. It's happened to me in games too. I can't move the camera/mouse unless if I click first.
How do I fix this?
iMac, OS X Yosemite 10.10.3
This Apple KB article will help answer some of your questions:
Target Display Mode: Frequently Asked Questions (FAQ)
From what you're describing, I think what is happening is that the Thunderbolt Display is acting like a regular display for the iMac, while the iMac is acting as a TDM for mini. Thus, the signal for the mini ends up on the Thunderbolt Display (since it's considered "part of" the iMac).
At first glance, I'd say that TDM isn't intended for multiple screens, though I'm not sure...
To specifically answer 1. and 2. (from list item 14 in the link above):
[...]Other keyboard and mouse input is disabled on the iMac while it is in TDM[...]
This means that the keyboard and mouse need to be connected to the mini in order to work beyond presssing Cmd+F2 to exit TDM.
In regards to what happens when you exit TDM, that's probably just a side effect of the Thunderbolt Display being the last active display (Remember, 10.9 moves the dock to the display on which you're interacting. Makes the menu bar opaque, too).
A possible workaround is to disable graphics switching: 
Though this will affect battery life.
Best Answer
OP here. (made an account). I already found a solution to my question thanks to the editor who used the title "Hover doesn't follow mouse until click" It turned out to be an issue with my RAT 7 drivers. Apparently, Yosemite messed up a few things. An update fixed it, thankfully! http://madcatz.com/downloads/