Interestingly enough, the display name does appear in the "hover pop-up" that appears when you pause over names returned by the lookup . Makes even less sense now..
Maybe RIM would consider making the Lookup "Display" values configurable for BES Admins! For example, not only let us decide the name format that appears, but also letting us change the company name field to show location. For a corporate device... where most of the employees work for the same company, it isn't very helpful to see the same company name beside every entry in your lookup result set. So I think would be very convenient to allow us to choose what to information we want to display. So if we search for "Smith"... we see all the Smiths and, perhaps, their office locations, or Job Titles, basically some other value to help the user quickly pick the right Smith. Sure, you can hover over every name and get some additional info... But that's only name and email address.
I know it's just crazy talk! But it would make a lot of my users very happy.