However, I already have a 'normal' second monitor connected to my Macbook, would the Lilliput break the 2 monitor limit and not work? Or is USB different?
Assuming the drivers work/exist as per "Compatible with certain Mac OS X 10.4.11 or later (Intel CPU only), Windows XP, Vista and Windows 7" then "No extra video card required: the Lilliput USB display has a built in video card that runs over any USB 2.0 connection" It should theoretically become a second or third (Nth) monitor depending how many are already hooked up.
I also have a second monitor attached to my MB Pro (big 25" Cinema display), and there's no conflict between it and the Lilliput. However, the only Snow Leopard driver I've found so far is beta, and the Lilliput gets all sqwinched up in portrait mode. Also, haven't found a touch driver yet. :P
Otherwise, works great!
MacBooks can drive more than two monitors. The "two monitor limit" is because there is 1 attached to the laptop and 1 additional physical port.