Using the 27″ iMac (Summer 2010) as your second monitor does give you the benefit of a great desktop real estate, an additional of 2560X1440 pixels, and a pretty decent secondary computer at the same time.
It’s a little tricky to set all the gears up and the Apple website doesn’t have a clear description of what elements are required to achieve it. However, here is an illustration of my setup.
If you have a single DVI and Mini Displayport output card like my ATI Radeon HD 4870, you will need a Gefen DVI to MDP Converter in order to hook up your 24″ Apple Cinema Display. First, Run the MDP output cable from your display to the converter and using a DVI to DVI cable to run from the converter to the input of your video card. This doesn’t work well with the 27″ iMac because the Gefen DVI to MDP converter can support up to 1920X1080 resolution only, which will be a big waste of the glorious screen resolution on the 27″ iMac. Then you can get a Belkin MDP to MDP cable (strange enough, Apple currently doesn’t sell MDP to MDP cable) to run from the back of your iMac to the MDP port on your video card. That’s it!
Once you get everything hooked up, you can power up both computer and then hit Command + F2 on the iMac keyboard to set Target display mode so it becomes a the monitor of your Mac Pro. For me, I set the 27″ iMac to my primary monitor because of the large and beautiful screen and lots of room to work with. To switch back to see the iMac desktop, hit Command + F2 again on the iMac keyboard.
Good luck and have fun with it!