In a lens-based collimated display system the monitor is viewed through a convex lens with the monitor located at the focal point of the lens. The lens needs to be quite large, so these types of collimated displays are good candidates for Fresnel lenses. With a Fresnel lens, this sort of display system is likely one of the more financially approachable collimated system for the recreational flight simmer. To get a feel for how a lens can be used to produce a collimated display, consider the following drawing.
A simple lens will cause parallel light paths to converge at the lens' focal point, which is one focal length away from the lens. A collimated display simply uses a lens the other way around. A lens will bend the divergent light paths of a light source placed at its focal point into parallel paths. So to make a collimated display simply put a large lens one focal length in front of your monitor.
It's possible to combine multiple monitors to generate a larger overall image. The monitors are simply placed next to each other and angled in slightly. The edges of the lenses touch. The virtual images seen through the lenses will also appear to touch. Take a look at Rick Lee's website for information on this. At one point (hopefully now as well) he had a copy of a paper ("Current Developments in Visual Display Technology for Fighter Type Simulations", by J Dugdale, M. Fortin, and J.Turner) describing a very large display system utilizing quite a number of monitors. The same paper is also posted on the web site of Link Simulation and Training.
The technology described in that paper is now being commercialized by a Boeing spin off company called Bugeye Technologies. They have several versions in their product lineup. They are aimed specifically aimed at arcade and game use.