Displacement Offset is just that - an offset. It adds or subtracts (depending on positive or negative) a fixed, uniform amount to the displacement. So for example if you had a terrain that was exactly as you wanted it (i.e. the amplitude, distance between peak and valley, of the terrain shapes was good), but you wanted it to be raised 100 meters up (keeping the exact same shapes), you'd add a 100m positive offset. How this interacts with objects I'm not certain, except to say that as you know object displacement is a bit finicky.
If I understand your thought process correctly, you are maybe thinking that if you displace outward by 1m, then use a displacement function/map to add *negative* (inward) displacement of -1m *or less* (i.e. it does not displace *below* the original surface), then perhaps it will avoid the artifacts you're seeing. I honestly do not know if that is the case, but it should be easy enough to try. Matt, assuming my understanding is correct, does my explanation of the idea make any more sense to you?
- Oshyan