From here, emphasis mine:
Products Affected
iMac (21.5-inch, Mid 2011), iMac (27-inch, Mid 2011)
The iMac (Mid 2011) has Thunderbolt ports that support:
- [...]
- The Thunderbolt port does not accept input for Target Display Mode via a Mini DisplayPort cable.
From here:
If you have an iMac with Thunderbolt, any other Mac with Thunderbolt can use it as a display. The iMac will play both the video and audio from the other Mac.
If you have a 27-inch iMac with a Mini DisplayPort, any other Mac with a Mini DisplayPort or Thunderbolt port can use it as a display. Make sure you have a Mini DisplayPort to Mini DisplayPort cable.
Since you have a Thunderbolt Mac, you cannot use it as a display for DisplayPort output.
So, I've finally received my MBP and the Dual-link-DVI to Mini DisplayPort
adapter (simply adapter from now on).
The Korean monitor has been more than worth it, it works superbly absolutely great over the digital link.
The adapter doesn't work at all if you don't plug the USB connector in also. If you plug it in, connect the display, then remove the USB plug, it will stop working instantly. So apparently that USB plug is 100% needed.
I happened to have a VGA to Mini DisplayPort
adapter lying around, so I've connected a second external display on the second Thunderbolt port. Everything works fine, my MBP now has 3 displays. I plan to replace this with a HDMI cable, since the MBP also has a HDMI port, it should work.
@Hennes commented on my question above, his answer has been very helpful.
Apparently the adapter is an active component, and it needs to be powered. It draws that power from the MBP's USB plug. To avoid losing a USB port on the MBP, the adapter provides another USB port on the other end, where you can connect whichever device was using the USB port. It seems that the adapter piggybacks on the USB port's power line, while just forwarding the others.
I wander if you could plug two of these adapters one into the other's USB port, and both in each thunderbolt port.
Anyway, the setup works great, but it's a LOT of wires to plug in.
If I were to just buy two of Apple's thunderbolt displays, I would only ever have one thunderbolt cable to connect, and the monitors would act as USB hubs too. But that's $2000 compared to $500.
Best Answer
Supposedly Apple confirmed that to this guy this morning:
http://gigaom.com/apple/new-27-inch-imac-supports-dual-external-display-output/