I was advised by someone that the work around for this is to specify separate profiles for each instance of iceweasel by using the -P <profile> option. It seems that only one instance of iceweasel can have read/write access to the profile at a time and starting a second instance will either fail or fall into some behaviour where you get another window on the same display because it is then the same instance reading the profile.
epiphany also can use this work around but the --profile=DIR option must be used instead. I can only assume that the FireFox code will also work with this too but as I do not have a FireFox binary available to me at the office I cannot confirm this at present. I would suggest that in the very least the --display option gets a note in the man page saying that to run on multiple displays at the same time a unique -P [profile] value will be needed per display. Something like "May require -P [profile], see below." would be enough to give a user a hint at the work around. It might be better that a default profile is created for each display, but that would cause unexpected behaviour as profile settings would be different between the two displays without any explanation and I can imagine this causing more confusion than it is worth. Posting this work around to both https://bugzilla.mozilla.org/show_bug.cgi?id=537355 and http://bugs.debian.org/cgi-bin/bugreport.cgi?bug=200869 so that things stay in sync as I am not yet sure which of the two is responsible for the quirky bit of code.
