You will want this:

http://www.x.org/wiki/Development/Documentation/Multiseat/

And if you're on arch linux this is a good start:

https://wiki.archlinux.org/index.php/xorg_multiseat

Five years ago my wife and I shared an Ubuntu desktop. It was awesome, and we were even able to play 3D games together.

If I remember correctly, I had to bump the computer up to 6GB of RAM. She was running off the motherboard's built-in video card and I had two monitors on a separate card.

Eventually Ubuntu changed things so that it wouldn't work anymore, but I believe that it's possible to do now. If you have kids this would be a cheap way to give them all a decent amount of computing power.

In Finland, a number of schools nowadays use Linux in this fashion. This solution has been especially great for modernizing entire computer classrooms at once, recycling old desktop PCs as LTSP clients. A server capable of serving a classroom full of clients is a lot cheaper than replacing the PCs. In my town, there's a company called Opinsys (http://www.opinsys.fi/en/) who does this and publishes most if not all of their code in Github (https://github.com/opinsys/). I wonder if they've been considering Raspberry Pis as clients.

Yes, I have been using Fedora this way for a couple years now (ever since systemd made this easy in Fedora 17). Two heads, one running MythTV (most of the time), the other is my workstation.

In this case, the Raspberry Pi is an LDM client. More information is available on Wikipedia, and the LTSP wiki. Edubuntu also has good resources on LTSP, as it is integrated into the Distro!

As long as you're using at least a 100Mb/s network (We use GbE), you should see a smooth experience. All works just as well as using a local machine, give or take some frames here and there. Just a forewarning, stay away from Google Chrome, and Chromium. They are awful to use with LTSP, you must deploy them as local apps as a fat-thin client solution, which isn't compatible with the Pi. The reasoning for this is that Chrome makes too many calls to the X server, and this causes horrible performance, you'll literally be watching chrome refresh, like loading an image over dialup.

I thought that Pi was the ideal for LTSP and remote X in local network. The achilles heel of Pi is that it's limited to 100mbps and not even all that due to its shared bus limitation. From experience, I could also tell the difference between 1Gbps and 100mbps NIC when connecting via X, so 100mbps wasn't good for multimedia. However, it still works great for most office-related work.

It will work fine, as long as it is your authoritative DHCP server on your VLAN/LAN. I have it running on an ESXi server, alongside a load of other VMs. I have allocated it the following for ~15 users: 4GB RAM, 4 Cores across 2 sockets.