I normally don't meander into this forum, but since I'm here I thought I would chime in on my experiences.
Small tft/lcd screens ... don't bother unless you are using a psone because they are so tiny that any output on them is unreadable in terms of text unless you have vga/component out and as you've discovered it's very dificult to get that on these smaller screens unless you buy one so expensive that you might as well buy a cheap computer lcd screen which is larger and has a better res.
As for your text segmented displays, they aren't such a good idea because there isn't a lot of text you can display on them unless you buy the 50-60 dollar models, in which case, again you could get a discounted pc lcd display. Also there isn't as much interest in programming for these displays lately. Mind you they are easy to program to, you could probably write something youself, but the current buzz around dual displays is due to mame, which supports dual monitors, not a monitor and a segmented display.
I've got some dual screen software coming up that is shaping up nicely. It basically makes your secondary display "smart" and it displays relevant data to the game/app/whatever you have running. Better still, is the fact that it takes advantage of the fact that joysticks can be polled without focus to allow you to make independant controls for your screen. (you can scroll through a move list while playing street fighter 2 on your primary display).
Getting back on topic. These smaller screens aren't very good for reading text. I'm not talking about large text, like you might see on a custom j5 layut or something, I mean smaller text (12 pt or less). Even non-hacked vga screens of this size can't display really tiny text, so keep that in mind.