I've struggled with setting up displacement textures generated by 3DCoat to work in iClone 7. The workflow presented by Reallusion's tutorials/doc only seemed specific to displacement examples iClone provides but in general tessellation and displacement settings are in iClone are scattered/almost hidden if you don't look hard enough. I saw a video tut by https://youtu.be/HcM42FdOtPs and it didn't work for my 3DCoat exported textures . If I just use tessellation the model will appear cracked and sliding the displacement strength just looses the displacement details.

I've been working with 8k photo scanned textures and to make the model appear solid & clear/cleaner looking displacement I would recommend NOT using the tessellation slider by itself, either set to 0 or additionally go to modify, attribute tab, set the smoothing option to subdivision to 1-3 then slowly ramp up tessellation to what looks best.

I'm suggesting to put everything to do with displacement in one area or at least put the mesh smoothing/subdivision in the materials area as well under the tessellation field and or update your workflow with this information.