By "not a multi-monitor issue" you mean the VM is in a single, full-sized window? That would be a MC Desktop you could switch to by Control-1, as you described above. If you mean "full screen and using two monitors", then you are out of luck with VMWare alone AFAIK.
BTW, just to heap on the confusion, in my Windows VM, there is "Full Screen" from the View menu (which puts it maximized into a MC Desktop) and the Lion FS button (the two arrows in the upper right). The Lion FS button puts me into "Lion FS with both monitors" mode in Windows. However, I made a (broken) Solaris 10 VM for testing and there is ONLY the Lion FS mode that gets us into trouble (with the stupid useless grey second screen). So, it sounds like if you can live with your Linux in a large window instead of a Lion FS desktop, you could keep them both in MC Desktop modes and be happy. (I pressed the green + and removed the menu bar and it looked ok).
Alternatively, Total Spaces ($18) was able to set up hot keys for any Lion full-screen app. I opened two different "full-screen dual monitor" VMs and set up hot keys (ALT-CTRL-9 and ALT-CTRL-0) and was able to switch between them no problem. Again, these are not MC Desktops--they are the Lion FS ones you don't normally get hot keys for.
Lastly, I didn't confirm this exact scenario in Parallels, but I'm pretty sure they are MC Desktops and not Lion FS apps when using two monitors (the question is still moot if only using single monitor). If you don't want to spend the money on Parallels, and need your Linux VM in Lion FS, Total Spaces might be your best bet. Seems like a terminal window is a silly use of a Lion FS mode, but what do I know. 