Why do I get a plain blue screen when I connect my Mac Mini to an external monitor?
Finally figured this out.  The issue had to do with the fact that I am using multiple users and Fast User Switching.

You can read more details about it in this thread:  http://discussions.apple.com/thread.jspa?threadID=2177922&amp;start=15&amp;tstart=0

The gist is that each user has it's own loginwindow process running.  These multiple loginwindow process' reek havoc with any method of remote controlling the mac -VNC, Apple Remote Desktop, LogMeIn even unplugging/plugging in a monitor is affected.  

So you need to kill all loginwindow processes before connecting.

To do this:  


Connect via ssh
issue a ps auxwww|grep loginwindow to find the current loginwindow processes that are running - there will be one for each user + one for console
for each process call sudo kill -9 pid where pid is the process id


* note:  you do not need to kill the loginwindow for console

Much thanks to Martin Marconcini who led me down the path of investigating the running processes via SSH.