dsimagry, Mark wasn't asking about a Mid 2011 iMac, he was asking about a mid 2010 iMac with a 2011 MBP. That link is not applicable.
Mark, I have a similar setup (same iMac, 2012 MBP with thunderbolt) and have been working on it for a while. While the Thunderbolt ports are supposedly backwards compatible with the Mini DisplayPort interface, a bunch of reading (and an experimental purchase (and subsequent return) of a $70 Thunderbolt cable to try it out) indicates that you can't do that with a Thunderbolt cable but that a Mini DisplayPort <--> Mini DisplayPort cable should work.
As I'm in Canada, it's been a right pain to get one of those (less selection on our Amazon than yours) but I finally got one and only just tried it out this morning. It _DOES_ work, but there are some display refresh/jaggies issues on the iMac. I don't know if that's maybe because the MBP is running on battery at the moment & doesn't have enough power to consistently drive the larger display or whether there's something else wrong, but I'll be spending the remainder of my long weekend trying to figure that out. The issue is that any mouse movement on the screen causes bands of what looks like loss of frame sync 'static'.
I'll let you know here if what I eventually figure out. On the up side, this is by FAR the closest I've gotten so far.
If you haven't fixed this problem, are still interested or have bought new Macs at great expense, here is the solution for you!
There was a new Thunderbol Target Display Update last night and the MDP Target Display Utilites have been updated to allow this function!
This Apple web page says that it is possible! Go down to point five! Then you will be able to see what you need to buy to do it correctly.
That should be all you need! Good luck!
I now do the exact same as what you are trying to do! It didn't work from my TB until recently and the new update fixes a few bugs it did have!
A quick search on how to connect a Thunderbolt Mac to a MiniDisplayPort iMac (the latter in Target Display Mode) took me to this discussion. I was wondering about the possibilty to connect my new (i.e. late 2012) iMac to my old (i.e. late 2009) iMac. You mention in your post to post any results. Did you figure it out? If so, could you please enlighten me and others?
As you want to connect your late 2009 iMac (set as target display) to your late 2012 iMac, all you will need is a standard Mini Displayport to Mini Displayport cable. Thunderbolt technology natively supports Mini Displayport as this is the format that the display data is sent. The connectors are identical, so it is just as easy as plugging the cable into the two machines.
Installing cable (trouble shoot #1):
If you have trouble getting the target display to work, try a boot ordered approach.
Turn the target display on first, plug in the cable to the target display (not the late 2012 iMac), turn on the late 2012 iMac, wait until OS has finished launching, insert MDP cable into late 2012 iMac and press CMD + F2 on the late 2009 iMac keyboard to set as taget display. You should then navigate to the Display System Preferences window to check out your settings. If all is good, you should be all sorted!