Hello guys!
First real post on here but I was following this discussion and thought I might add my two cents to the mix. I've played 3.5 and rpgs in general for a while, so I've seen the occasional rules question come up over time. :)
The wording from the Pathfinder Core rulebook (which has been stated but I wish to repeat for clarity) states that displacement offers a 50% miss chance "as if" they had total concealment. It goes on to say that unlike total concealment, they can be targetted normally.
Now, let's look at total concealment. Again, direct from PF core rulebook. It mentions very quickly that someone with total concealment can't be targetted; instead, you can target the square they're in and hope for a hit. Hence the 50% miss chance from total concealment, but the important note here is displacement has an additional clause that prevents this last bit: you can target and attack someone with displacement as normal, but you suffer a miss chance. Everyone so far, from what I've read, has agreed to these points... so let's look at the situation a bit closer.
The real issue is not Displacement, but the wording for Sneak attack in conjunction with Displacement. The first line for sneak attack reads this: if a rogue can catch an opponent when he is unable to defend himself effectively. Okay, now we know what to look for. It gives clear examples: denied dex bonus or flanked. The description for sneak attack ends with the problem phrasing; again this is repeated just for clarity and ease to find: The rogue must be able to see the target well enough to pick out a vital spot and reach such a spot. A rogue cannot sneak attack while striking a target with concealment.
That last phrase is the kicker. Now, no one is arguing that displacement acts like concealment. The problem arises is that we are not sure if displacement actually gives a type of concealment.
Here is something that we are not going to find a clear answer for: RAI, RAW, and Fluff appear to be in conflict. RAI is impossible to determine until a FAQ addresses this, RAW is being argued, so let's look at fluff to make a determination.
Back to displacement: The subject appears to be about 2 feet from its actual location. Now, this could be taken a number of ways. Is the original target now effectively invisible, or is the light being bent so to throw off the sight of their attacker, who can see them but has their vision skewed? Frankly, in some of the earlier forms of D&D I believe displacement made a mirror image beside you, and if hit it vanished for 1 round, but could return. If this were the case now it'd be a simple matter of the rogue slicing the throat clearly, but just making sure they have the right target. This, however, is not how the spell's description is worded, but might be what the intention is. I know that's how the displacer beast has been described and displayed in a few occasions. Frankly, I've always thought both images were there: the miss chance was simply the chance you could swing at the wrong target, all the while the image is shifting back and forth, making sure one single strike doesn't negate the defense. and keeping the opponent guessing on which target is real.
What we need to look at is what the spell does not say: besides essentially bending light to shift where the target seems to be, there's no description whatsoever that suggests the target's image is affected in any way other than perceived location. Meaning this: the target appears clearly in a designated spot that is very close to the original target. In fact, the spell description moves on to state clearly the subject can be targetted normally. This last part seals the deal for me: the subject can be targetted. The subject has a 50% miss chance.
That last part is what gets me to think you can: the displacement isn't perfect, some trace allows the original target to be threatened; be it another image of them or whatever. The miss chance comes from, essentially, picking the right person and either hitting a jugular, or empty air.
Anyway, hope to see you all around! :)