This issue still exists for me in 12.3 on an Intel (2018 T2) Mac Mini, verified as a Monterey regression. External monitors are kind of important on a Mac mini!
I always hang back on big upgrades for a few point releases as my environment is fairly complicated an early point release just burn time up doing Apple's testing for them. Issues seems to be quieting down so put my big boy pants on an upgraded to 12.3 from 11.6.5.
On 12.3 I can only have one monitor working in any boot cycle, first one wins and they just sit there flickering and failing to sync the second one every few seconds until I pull the power cord on the one that is failing to come up. Both identical Iiyama Pro-Lite XUB3493WQSU, both USB-c/Thunderbolt-3 connected (on different TB lanes on the Mac, and only 3440x1440x60/75Hz each monitor), no issues at all with anything from Mojave on until Monterey came along so definitely a software issue in this release.
Especially galling as the downgrade process is *so* broken in T2 Intel Macs. They won't downgrade restore the OS from TM backups, nothing worked for me until disowned it in Monterey and then nuked it back to its delivery era Mojave, but it still wouldn't forward upgrade from there other than to Catalina or (surprise surprise Monterey), seemed to have a total aversion to re-installing Big Sur. Completed in the end by making a USB bootable and lots of dead chicken waving. A day of my life lost and I'm still waiting for a migrate from my TM backups.
Anyway, things that didn't work that I've seen various people suggest:
- Moving one of the monitors to HDMI (made no difference).
- Power cycling in all sorts of orders.
- SMC and PRAM resets.
- Changing DP version level on monitors.
- Changing sync rates.
It is 100% repeatable, going back to any version other than Monterey resolves it. As a consequence I now have an extra Monterey volume that I can boot across to in order to reproduce the issue and would be more than happy to flush a few more hours working with someone from Apple to boot across and grab traces if it helps get some resolution, but I guess I'm going to be sticking on Big Sur for a while.