how to make Windows laptop temporarily act as dual monitor for my Linux desktop?
 

Is there a way to do that?
Do I have to install some client software on the Windows laptop and some kind of screen streaming server on the Linux desktop?

No

You could use remote desktop software or X forwarding but neither will act like a dual monitor setup.

Hopefully a lot of dual screen issues will start being worked out when 8.04 comes out. Hot plugging support would make things a lot more likable. I generally flick my second screen on and off as needed and restarting X for that is a pain.

When it's going nicely with hotplug I imagine little finishing touches and better GUIs will come along with the easier initial setup.