This is a great thread....
the OP had a great explanation, and I haven't had the time to verify it fully but it makes sense.
In a nutshell the away these display ports work seems is that :
1st that graphic card starts talking to the connected monitor, and it then discovers if the connected port is analog or digital, and what the specifications of the monitor are. If the monitor is accepting digital data (often don't) then the card has to transform that digital data directly, otherwise it has to convert it into a power hungry analog format.
For all those electrical engineers out there (like me) , the reality is that both signals are digitally coded, but the "older" technology (VGA DVI HDMI) has a higher current deliverance and a less sensitive receiver... think of it as LVDS. On the other hand Display Port has a smaller current deliverance and therefore needs to be talking to a smart and sensitive receiver.. think of it as Current Mode Logic (CML)...
Another big deference is that VGA is feed forward only, so the graphic card never hears back from the monitor in VGA mode. Display Port talks to the monitor and retrieves information back from it... this information could be resolution and refresh rate and also coded digital information to improve the signal integrate of the link.
So some cards actually are capable to deliver the data in an analog format from all 3 ports, because they have the power, actually all ports have the amplifier to deliver in VGA format... its just that if you connect all 3 in that format you get less power delivered to each driver, and higher chance of getting bad data received at the input... This is called Bit Error Rate (BER), and honestly,,, companies do like to sell you a $100 converter.
I have a 6 display 5870, and have had a hard time getting all 6 of them to work, even tho I have 4 active converters and 2 passive converters .... I could get 3 working with passive converters although it says that I need 1 active and 2 passive in the website. If my theory is right, then having 5 or 6 active converts should get my 6 displays working with no pain... right now it is very painful... as screens go blank and resolutions get missed up...
Hope my 2 cents helps someone out there... please correct me if I posted anything wrong... I'll report back when I get my 5th active converter and try it out.