The VGA->DVI->HDMI chain retained the following simplicity of: 1. Send color of pixel 2. At the end of the line + blank send a pulse on HSYNC pin 3. At the end of the screen send a signal on the VSYNC pic. That's it (almost, there's EDID). If you can implement this, chances are you can display what's sent down the cable accurately. Likewise with audio, you just send a voltage level down the cable, if you want to be fancy, you use SPDIF, in which case you send a 16-24 bit number per channel.
That's it, no handshake, no negotiation.
I have a TB dock for my Macbook. Sometimes it doesn't register. Sometimes it reboots for some reason, giving me 10 seconds of black screen. There's a 10% chance on every connect or reboot that it will just plainly not work.
And it's way better than it used to be, but still pretty bad.