From what I've read it sounds like one of the benefits of displacement mapping is that it can be used as a sort of LOD. You can fill your scene with low complexity models and geometry and increase the complexity of these items as you draw near them by displacing them.
One thing I wonder since you are limited until the DX9 functionality is added is if it might be possible to use the terrain deformation being discussed here
http://www.conitecserver.com/ubbthreads/showflat.php?Cat=&Number=335660&page=0&view=collapsed&sb=5&o=186&fpart=1to create 'fake displacement' mapping using the normal map until the real stuff is available?
Anyway sounds interesting.
