Has the Virtual Display screen sharing been removed in Mountain Lion?
OK, I sussed it out.  You can still do it, it's just that the way you do it is based on context rather than using the appropriate command.

Basically, to use the virtual display, you need multiple user accounts on the target machine, and you need an account to be already logged into the target machine such that you can login a 2nd time using the virtual display.  Any account you wish to log into obviously needs the associated sharing rights enabled.  Then follow the following logic:


If no one is logged into the target machine, you will always get the Hardware display showing the normal login screen, when you login from that screen you continue to use the hardware display.
If the user you try to login as is already logged in, then it will always switch to that user and continue to use the hardware display
If you login with a user who is not already logged in at the hardware display but someone else is (this is the key, the Hardware display needs to be in use by someone else), you get the following message and the ability to use the virtual display.




If you want to use the virtual display for privacy reasons, you cannot simply switch to it like you could in 10.7, but you could simply leave the target machine with Guest logged in on the Hardware display to allow you to login as your primary user on the Virtual one.