All that is needed is an external monitor hooked up to the Mac and the standard Parallels install, along with the extensions that come with Parallels for the guest OS (in my case, XP). Arrange your screens however you prefer, then place Parallels on the screen that doesn't include the Dock and the Mac OS X menus. Next, set Parallels to full screen mode, and it will maximize to fill the external monitor. Now you can go back and forth between the two OS's simply by mousing from one screen to the other and clicking to activate the OS on that screen.
In this dual screen mode, Exposé works, but the guest OS environment is not involved in the action. Also, zooming is just plain broken.

