Actually yes you can... this article states it right at the very top of the article.
"With Target Display mode, you can use your iMac (27-inch, Mid 2010) or iMac (27-inch, Late 2009) with Mac OS X as an external display. Connect any computer or other device with a Mini DisplayPort to your 27-inch iMac using a Mini DisplayPort to Mini DisplayPort cable or using a converter that converts other electrical, video, and audio protocols from another source device to Mini DisplayPort compliant signals. (Cables and converters available separately.)"
Taken from this tech write up: http://support.apple.com/kb/HT3924?viewlocale=en_US&locale=en_US#
There are lots of videos on youtube showing people using the mini display to hdmi converters for hooking up their imac for dual monitors, xbox, pc's, etc.
this company sells them and has an instructional video worth watching:
http://www.monoprice.com/products/product.asp?c_id=104&cp_id=10428&cs_id=1042802 &p_id=5311&seq=1&format=2