Successful with Multiseat, no DPMS
Using the Kubuntu Jaunty x64 release candidate, I successfully setup and ran a multiseat setup using a Radeon 4850 and a Radeon 3850. I found the key to be minimal config (as few extra options as possible, forcing Xorg to defaults).
The biggest initial issue I had was that my 3850 kept hopping device IDs between reboots. It couldn't decide whether to settle on PCI:3:0:0 or PCI:4:0:0, so I was constantly modifying my Xorg.conf for the id-du-jour. If the second card wasn't initialized (due to wrong ID), the whole system would hang as soon as the password was entered in KDM (hard lock) in the first session.
When it did work, it worked pretty well. Just for kicks, I played a few rounds of Unreal Tournament 2004 with my daughter using seat0 and seat1. Performance was stellar.
The one thing that really killed me about it was that no matter what, I could not get DPMS to work. xset dpms options would cause the monitor to blank (black screen), but the backlight stayed on. vbetool was the only way to get the monitor to actually enter DPMS (and only on seat0).
I'm really not looking to keep 2 or 4 monitors on 24/7. If I can't figure out a fix, I'm going to start looking for different hardware.