Hi,
Indeed, the ‘individual vertices’ mode has some similarity with the displacement modifier. It is a bit simpler to set up, not needing any texture, but far less powerfull, being in a way too random, or ‘only random’. Textures are far more flexible. I did have plans to allow for random vertex displacement to be either along normal or tangent to normal, or a bit of both in a configurable way, instead of x,y,z.
Anyway, this ‘individual vertices’ mode is not the main purpose, it’s more like a by-product. The main goal was to give randomness to objects after they are duplicated by an array modifier. Extending the array modifier could work fine for one dimension (instances in a single ligne), but cannot work for 2 or 3 dimensions, because the second array modifier on the stack only sees as its input the line of objects that came out of the first array modifier. For that reason at least, you may only distinguish loose parts, and a dedicated modifier, or at least distinct from array, is a better approach.
It was suggested to add these features as new modes to the displacement modifier, and indeed there is some logic to this, since be it vertices, a whole mesh or loose parts, be it randomly or along a texture, it is displacement that we are doing. But the displacement modifier is so much associated with textures to every Blender user, that I fear many would not turn to it for the new features. But I’ll gladly implement it this way if there is a consensus for extending the displacement modifier.
Anyway, I’m happy to see there is some interest for these features. The ‘Whole Mesh’ mode, together with ‘object Id as seed’ option, can also be a useful thing I believe: you copy objects, be it by shift-D or alt-D, and yet they are not perfectly identical.
I’ll be working on it some more and propose again. Maybe it can go into a 2.7x.
@blenderman75: yes, modifiers like this need to be in C, cannot be implemented in Python.