I attempted to use this with dual screens in OS X 10.5.8 (current patches as of 5/16). While this feature works with screen 1 (that is, the side with the menu bar and dock), this feature does not work on screen 2. I would assume that it doesn't work on additional screens, but I do not have additional video ports and monitors to test with. I would also assume that this issue probably would not affect users of devices like Matrox's DualHead2Go, as those devices essentially split the resolution provided from the video port (i.e. the computer thinks that it's displaying 2048x1024 but the device is splitting the output to two separate displays at 1280x1024 each in a side-by-side mode).
I would make a video of what's happening, but I don't have appropriate screen capture software or a high-quality webcam.