One of the challenges of using a Displace Modifier is that the triangulation is very often not good for how the displaced mesh will crease. I feel like there should be an option in the Displace Modifier that will adaptively change the triangulation to flow correctly. See the attached image (or attached scene) to explore an example of the poor triangulation. The creasing should flow along with the swirls of the heightmap--but instead the creasing from default plane quads forces it to be jagged.
The same function should be available, also, as a standalone modifier for use in other situations.
adaptive_retriangulation_example.zip