From two different sources.
Scott:
We tend to use displacements because we can give the environments a more organic look while still having the benefits of using BSP, such as lighting them via light maps, blended textures, quick iteration, etc. Rooftops can sag, streets can be bumpy, and so on, which helps each structure look unique and natural. Poly for poly, displacements render faster than BSP, but they have their own tradeoffs, including more expensive collision.
Matt followed up with:
Last I checked with a rendering programmer, 4 disp quads equal 1 normal bsp quad. Since you cant tessellate < 4 per face, it's a wash as long as you are only drawing the faces that you need to.