#1 - create an a real xterm - ssh into target system.
#2 - echo $DISPLAY - this will change on every session going in.
#3 - launch iTerm.
#4 - from iTerm, ssh in to the same target box.
#5 - set the DISPLAY to the above one listed.
#6 - xcalc - works.

I guess it is a usable one-of-kludge - but not something I would be willing to do on an ongoing basis.

I could setup a script to be executed on login. If the DISPLAY value is set, save it. If it is not, then use the last saved one (assuming it is from an active "correct" connection) (dangerous!)

Thanks.