It's also my understanding that in order to enable SLI mode or CF mode (where it splits processing between the cards), you have to use a single monitor output.
Is this correct?
That's my understanding as well. I've had similar questions myself, and been told no
SLI or Xfire specifically for this reason. The cards also have to use the same driver for both to avoid conflicts in Vista and probablly 7 as well ( not a problem in XP ). The best money-no-object way to get 3 is to use a matrox "triple head to go". With this, the 3 monitors can be used together in games as well with little difficulty. Four is a little tougher though. Running 2 cards, and using the 2 outputs on each would work best. Only your primary video card needs to be good in this case. Most of the actuall processing will be done on the primary card and the second video card will only be minimaly used.