Technically it does.
See the D20 SRD for some evidence for what I'm about to say.
A Large Longsword = a Medium Greatsword. Both do 2d6 damage and crit from 19-20/x2. If Monkey Grip means you can one-hand Large Longswords, then you basically get the same result. But that doesn't mean you can turn around and dual-wield Greatswords, I admit, since technically they are different weapons (with different proficiencies required, and different racial bonuses).
In DMG1, however, you were given the option of converting certain weapons into different weapons based on their size category. For example, Large Longsword = Medium Greatsword, Small Longsword = Medium Dagger (and vice versa). This was to allow greater flexibility on the sorts of drops you received when fighting enemy monsters.
So, in a nutshell, if you were following this optional rule you could treat a Medium Greatsword as a Large Longsword, then dual-wield it according to Monkey Grip. What this means is that proficiencies and racial bonuses apply to both, and if you find either one as treasure they are virtually exchangeable.
And of course, if you go with later additions to 3.5, they scrapped the small/one handed/two handed system entirely and simply replaced it with the following system:
Something built for one size category larger than you = two handed.
Something built for your size category = one handed.
Something built for one size category less than you = light.
So as an example, the Maul was supposed to be a Huge/unusable weapon with an Exotic Proficiency feat that allowed you to treat it as a Large/two handed weapon (similar to the Bastard Sword which allowed you to take a proficiency feat to treat it as a Medium/one handed weapon). That's why the Maul does more damage than the Greatclub. Retroactively, all weapons that were two-handed for a medium creature were to be considered built for Large creatures as one-handed, and all light weapons for a medium creature were to be considered built for Small creatures as one-handed weapons.
So a Large Longsword = 2 handed weapon, and Medium Greatsword = 2 handed weapon. If I recall correctly, Monkey Grip allows you to treat weapons as one size category smaller while retaining their damage. So, Medium Greatsword = Small Greatsword = one handed weapon.
So according to the official rules (certainly not the Core 3, but if I recall correctly the Maul was in the Players Handbook 2), yes, Monkey Grip works like that.
TL;DR: the feat works exactly as people think it does, but isn't really applicable to DDO.