Well, I made a discovery which only adds to the confusion.
It *is* possible to do get the example to work under the non-beta drivers, by simply using the colorMap texture unit to look up the displacement instead of the displacementMap one. (i.e., dv = tex2D_bilinear( colorMap, gl_MultiTexCoord0.xy ); However, the frame rate drops to about 2 frames a second, which makes me think the driver is switching to software mode internally.
Ultimately, is what you said, which is it *seems* to be a GLSL bug. My guess is that its not really flipping into ShaderModel 3.0 mode correctly. Its still in SM 2.0 for some reason. If I was super-fluent in opengl Assembly, I would translate it and see it in action. I guess my next step is to learn OpenGL Assembly.
